50% Growth in Rental Inventory

Unsold homes are becoming rentals

A strong trend is spreading to all regions. Sharply growing inventory. This trend will quickly lead to lower rental prices, the rental market is highly competitive so price reductions are most likely already happening.

Sellors are finding first home buyers are often unrealistic, offering prices well below market value. At the same time there will be many sellers who overestimate the value based on mid bubble peak predictions. These factors may be driving more failed sales, especially if the owner is mortgage free.

The trend is in almost every region. Since February, NZ total rental inventory has risen from the lowest it’s been in 8 years to the highest. May 2024 NZ inventory is almost 50% higher than May 2023. See the NZ chart below and scan all regions in the rental Inventory tab above, it’s almost universal with some extremes like BoP, Wellington and Taranaki. However the giant is Auckland with 2000 more listings than at the same time last year.

The change appears to be driven by sellers pulling homes for sale and putting them up for rent. This has happened before, they are called accidental landlords. Lacking business experience, not price conscious and really just wanting to have someone else look after their old home leads to market distortions, so expect a wild ride.

Immigration may have slowed and changed the market too. I need to review it.