Survey shows 30% of property owners intend to sell, but will they actually do it?

CoreLogic’s latest property sales figures, released on 21 June, show that property investors, apartment owners and homeowners selling in Auckland are the groups most likely to make a loss in the current market. Some property experts say record numbers of owners are considering selling their properties within the next year, but history suggests this does not mean most of them will ultimately leave the property market.

Prominent New Zealand independent economist Tony Alexander

The latest Investor Insight report jointly released by Crockers and Tony Alexander found that 30% of the 433 respondents were considering selling their properties within the next year. This was up from 25.3% in the previous month’s report and well above the survey’s long-term average of 23.7%. Alexander said the increase might reflect the fact that, with the new financial year, a policy further reducing the proportion of mortgage interest deductible against rental income by 25% would lead more landlords to decide against keeping their investment properties. Repayment pressure from rising mortgage rates was another factor that could not be ignored. Together, these adverse factors could prompt more landlords to consider selling.

However, Alexander also cautioned against taking the survey results at face value. Historically, a high proportion of respondents said they would definitely sell after the Labour government announced tax changes in March 2021, yet many have still not done so. One possible reason is that, after venting their frustration with Labour’s policies, property investors sit down to consider their properties’ long-term profitability and ultimately decide to hold off selling.

Meanwhile, many people are waiting for the outcome of this year’s general election, as the party that ultimately forms the government will directly influence some investors’ decisions to sell or hold their properties. National has already made clear that, if it wins, it will restore mortgage interest deductibility and shorten the bright-line test period from 5–10 years to 2 years. Alexander believes that, whatever the election result, there are some encouraging signs for landlords in the current market. Mortgage rates appear to have peaked, rapidly increasing net migration will boost rental demand, and numerous forecasts are already predicting higher house prices next year. In his view, more property investors may not necessarily enter the market to buy and sell existing properties, but more will enter the new-build market.

Similarly, a Property Investors’ Federation survey earlier this year found that the proportion of respondents saying they would or might sell their properties had risen from 21% in 2021 to 35%. The loss of interest deductibility was identified as the biggest driver of respondents’ decisions to sell.

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Presenting CoreLogic’s latest quarterly market report, head of property research Nick Goodall said recent sales figures did not show large numbers of owners selling their properties. Sales volumes may have risen slightly recently, but remained at historic lows, while new listings were also very scarce. This suggested the data did not support claims that property investors were selling en masse. He said buyer classification data showed mortgaged investors were buying fewer properties, but still accounted for 20% of the market, while cash investors accounted for 16%.

Auckland Property Investors’ Association general manager Sarina Gibbon

Auckland Property Investors’ Association general manager Sarina Gibbon said owners being open to selling did not mean they would actually do so. Before selling, they needed to consider many factors, including market conditions, rental demand and returns on capital. Many of her members were carefully examining which properties were delivering strong returns and which were underperforming, and considering when would be the best time to sell their portfolios. Although property investors felt squeezed by stricter government regulations and higher interest rates, they remained confident about the sector’s long-term prospects. Property remained a good investment opportunity, particularly compared with other asset classes. Landlords might currently lack confidence in the market, but most would not rush to sell, especially with net migration and rental demand continuing to rise. She believed people were indeed holding steady and waiting for the election result.