Investors stand to gain from new Government Policies, but more needs to be done to fully restore confidence, according to Harrison Vaughan, Managing Director of Tommy’s Property Management.
The reduction of the bright-line test and the gradual reinstatement of interest deductibility are positive steps towards making property investment more appealing. These changes alleviate some of the financial pressures on investors, making it easier for them to achieve better returns. However, while these measures are undoubtedly beneficial, they may not be sufficient on their own to fully reignite investor confidence.
The current market conditions—marked by an oversupply of rental properties, high interest rates, and economic uncertainties mean that investors are likely to remain cautious.
Harrison notes that additional assurances and incentives will be necessary to encourage investors to re-enter the market.
Harrison characterises Wellington as a tenants’ market, with over 1,700 properties currently available for rent. This surplus supply is putting downward pressure on rental yields, as landlords compete to attract quality tenants. Despite these competitive conditions, the average rental rate has seen very little movement, remaining at $640 per week, the same as this time last year. Recent job cuts in the government sector and minimal international student activity have further compounded the situation, making it even more challenging for landlords. In response, Harrison advises that landlords need to be strategic, ensuring their properties are competitively priced and well-maintained to stand out in this crowded market.
To renew investor confidence, several key factors need to be addressed. First and foremost, a more balanced supply-and-demand dynamic is essential. This can be achieved by stimulating demand through economic growth and attracting more international students and workers. Additionally, policies that provide greater certainty and stability for investors, such as upcoming changes to notice periods in the Residential Tenancies Act and reductions in the Official Cash Rate, will be crucial. Infrastructure improvements and urban development projects that enhance the desirability of certain areas can also play a significant role. Finally, clear and supportive communication from policymakers regarding long-term housing strategies will help investors feel more secure in their decisions.
When it comes to where investors are focusing their attention, suburban areas with good transport links, schools, and amenities are most in demand. Properties offering off-street parking, outdoor spaces, and energy-efficient features tend to attract higher interest. Suburbs such as Karori, Island Bay, Kelburn, Brooklyn, and Johnsonville are particularly popular due to their family-friendly environments and strong community feel. Additionally, well-maintained homes that cater to the needs of modern tenants—such as those with double glazing, heat pumps, and ample storage—are highly sought after. Investors are looking for properties that promise stable rental returns and the potential for long-term capital growth