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Looking to buy but unsure of your options? EVES Property Management can help.
Although winter is traditionally slower for the real estate sector, sales continue to decline. Prices continue to fall, while days to sell increase. However, looking for alternative ideas, EVES suggests that property management could be a viable option.
The past two years have seen an unprecedented boom in real estate prices. The snowball blinded all forecasts when Covid-19 hit. However, as with any cycle, what goes up inevitably comes down. Contradicting the extraordinary profits made by many homeowners, current headlines regularly point out the obvious as monthly figures from the Real Estate Institute support the decline. However, not all providers meet lower expectations. By revising their plans, the rental of the property is gaining ground.
The nationwide downward movement was considerable in the first half of 2022. Tauranga fared better than some. Many properties are staying on the market longer and median days to sell are increasing significantly, according to EVES’ Managing Director of Property Management, Joanna Martinez-Hart.
Recent figures from Bay of Plenty show the median number of days to sell in June 2022 was 55 – an increase of 24 from June 2021. Although this created a difficult situation as agents appeased sellers through a process of lowering their expectations, it also opened the door to a new approach. If selling was always the ultimate goal, but now was not the right time, why not rent the property and ride the tide until the pendulum swung?
With banks like Westpac and ASB now predicting a 20% decline in values over the next year, OneRoof property commentator Ashley Church is more positive. He recently said that between 1982 and 2011, the average house growth rate over a 10-year period was almost exactly 100%, averaged over the entire 30-year period. Although this rate was slower until 2021, it took an average of 12 years, rather than 10, for house prices to double during this period. Ashley thinks that over the long term, the overall direction is up.
Rental viable in the interim
In Tauranga and Western Bay there are currently 240 rentals on the books of EVES Property Management. A dedicated team of property managers are busy assessing market valuations, rental expectations and managing property management on behalf of clients.
They see a noticeable drift as sellers rent their homes in the current market. The reasons vary. Some went abroad and chose to keep their property rather than sell in the meantime. For various circumstances, some have rented their parents’ house, rather than selling immediately. Others moved elsewhere, but chose to rent and wait for a better deal. Some have chosen to rent while advertising their home for sale; the tenant fully aware of the temporary situation.
Katy Laidlaw, Rental Property Manager at EVES, has noticed a definite shift in mindset.
“I think people are looking at other options rather than selling. The market has slowed and properties are taking longer to sell.”
She recently leased a defunct domain that had been on the market since January. Referred to Katy for a potential rental, she advertised the property on August 3 and the tenant moved in this week. Another rental came to Katy after the property had not sold in three months as the owner prepared to move overseas.
“I announced last week that it was on the market for sale. We had a tenant selected, offered it to him after the last house opened and signed a deal the same day it was taken off the market. “
The owner has since left the country, but has the comfort of an income and is not worried about a property languishing on the market.
Renting while marketing a property for sale is also growing – such is the demand. Katy takes care of one, which is rented at a reduced rent.
“They moved in when it was advertised for sale. I recommended to people that if they rented out their property, it could be a periodic rental.”
Tenants have no illusions that the house could sell. During this time, the seller earns income, while his property continues to be marketed.
EVES property manager Max Thomas also notices the change in mood. It recently got new management due to falling selling prices. As the owners were unable to obtain the price they wanted, they opted to rent. It was rented quickly and at a good price.
Depending on the property, rental estimates in this neighborhood range from $500 to $570 for two bedrooms; $620 to $680 for three bedrooms and $720 to $760 for four bedrooms. Higher-end properties can fetch higher rents. Location is always key too.
In an industry focused on results and satisfied customers, this rental solution is gaining popularity as a win-win outcome. And by meeting rental demand, the double win ultimately becomes a trifecta.