Some would-be house sellers who have not been able to get the price they want are deciding instead to rent their properties out - but there is a warning they should take care.
Data from Cotality shows there was an increase in the number of properties that were listed for sale but did not sell, and were then rented, in both the market peak of 2021 and again in recent months.
Cotality chief property economist Kelvin Davidson said the 2021 peak could be because more people thought that being a property investor was an appealing prospect.
"I suspect more recently the upturn would have been because of developers not being able to sell at a sufficient price so renting out instead, or accidental 'Mum and Dad' landlords - as opposed to what might have been a conscious choice for someone to become a landlord back in 2021. This time there's probably been some people hoping to sell, but can't get a decent price or can't actually get a deal at all, so are holding on to it as a rental instead."
Recent Real Estate Institute data showed a 13 percent drop in the number of sales nationwide, year-on-year.
In recent months, properties have been withdrawn from sale and then listed for rent within three months at a rate of about 3000 a year.
At the peak of the market, it was 5500, but that fell to fewer than 2000 in 2023.
Sarina Gibbon of Tenancy Advisory - which provides advice to property managers, landlords and tenants - said she was encountering more people who had ended up as landlords because their plans to sell had failed.
Some were people who could afford to hold on and hope for a better price in future, she said, or people who had to move for work.
But she said it was not always a wise financial decision. "The propensity for Kiwi investors to use their first home as a rental property is a pretty bad habit… just because it's a great first home doesn't mean it's a great investment."
She said many had not given sufficient thought to the rules for rentals, such as the Residential Tenancies Act or the healthy homes rules.
Gibbon said she had spoken to one woman who believed that because she had been able to buy a property, it should be compliant as a rental. She was being taken to the Tenancy Tribunal because of health homes breaches.
"Rental law is traditionally not taken seriously and just treated as a bit of an afterthought. People get themselves in trouble because they don't realise that it's both a business undertaking and a legal undertaking."
She said anyone considering it should work with professional property managers.
Infometrics managing director Gareth Kiernan said it could be the case that properties that were not originally intended as investments would not get the same yield as those that were bought for the purpose of renting out.
"Generally speaking, investors tend to concentrate their purchases down towards the lower quarter of the property spectrum, whereas owner-occupier is median or higher.
"It comes down to the question of how much is a tenant prepared to pay for a house with x bedrooms… you might pay a bit more for a two-bedroom house or a three-bedroom house when it's a nice home as opposed to a lower quality one but it's probably not going to be commensurate to the value of the property. But obviously if they are worried about selling it and making a loss then perhaps having it tenanted and achieving some sort of return is a preferable outcome. A good second best outcome."
Property coach Steve Goodey said there were properties available for sale that never even registered on the market. He said a developer might have ten units available and decide to only advertise one to cut costs. That could mean the scale of unsold properties was understated, he said.
