According to Cotality’s rent-to-income ratio, median rents were still fractionally above their 20-year average, worth 25.8% of the median gross household income.

Davidson noted this percentage could be higher if rents were compared with the incomes of renting households only, given the median renter likely earns less than the median home owner.

Economist Tony Alexander wouldn’t go so far as to say the situation made life easy for renters. Rather, he described the market as “reasonable” for renters.

Alexander noted the feedback he received from the 200-300 property investors he surveyed every month aligned with Stats NZ’s data.

In late 2024, a net 21% of landlords surveyed found it hard to find good tenants. By the end of 2025, that portion doubled to 43%. It has since dropped back to 30%.

Similarly, Alexander noted that in late 2024, a net 62% of landlords said they intended to put rents up. A year later, that figure fell to 41%. It is now at 44%.

Alexander’s observation was that the weakening in the housing market had subsided. While the market was turning a corner, he couldn’t see it taking off any time soon.

Looking at the flow of rents, or the rents being charged as people sign up to new tenancies, this picked up a bit in recent months.

In March, rents were 0.4% lower than they were in March 2025, according to this measure. By June, they were 1% higher than they were in June 2025.

Davidson recognised landlords were grappling with large council rate increases and the prospect of rising interest rates.

However, he didn’t believe they were in a position to pass on higher costs to renters – at least while there was a decent amount of rental supply compared with demand.

Council rates rose by 8.3% between the June 2025 and 2026 quarters.

The average interest rate paid on the country’s stock of mortgage debt fell to 4.83% in May, according to the Reserve Bank, but will soon start increasing, as borrowers refix their mortgages at higher interest rates.

On the upside for landlords, insurance cost increases have abated, after spiking following Cyclone Gabrielle. Dwelling insurance was down 0.8% annually in the June quarter.

Looking ahead, Davidson said the residential property investors he spoke to were worried about what a potential change of government could mean for the property market.

He said investors were concerned about the possibility of a Labour-led Government once again preventing investors from deducting interest as an expense when paying tax.

He believed investors would be more comfortable with a capital gains tax than the removal of interest deductibility, which would hurt their cashflow.

Labour is yet to unveil what its interest deductibility policy will be going into the election.

The general consensus is that the property market is unlikely to fire up like it did during the pandemic years, when supply was constrained, interest rates were at record lows and the Reserve Bank temporarily removed loan-to-value restrictions imposed on banks.

Jenée Tibshraeny is the Herald’s Wellington business editor, based in the parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.

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