Why Property Investors Are Still the Unsung Backbone of the Rental Market

Discover how property investors help support the rental market in New Zealand

The Misunderstood Economics of Property Investment

A recent mainstream media article paints a bleak picture of New Zealand property investors, citing data that shows some are “topping up” their rental properties. The implication? That investors are irrational, driven by blind faith in capital gains, and out of touch with economic reality.

But this interpretation overlooks the foundational economic role they play in supporting the country’s rental housing ecosystem.

Tenants Are Not the Main Business. They Are the End User of a Broader Investment Strategy

Yes, tenants pay rent. But property investment isn't primarily about turning tenants into profit centres on day one. It’s about absorbing risk, enduring short term cashflow pain, and providing homes that tenants could never afford to buy, all while waiting for long term gains to materialize.

For tenants renting a new build - that means having the luxury of leasing a Rolls Royce for the price of a Mini.

For example, many tenants live in homes valued at $700,000 or more, yet pay rent equivalent to servicing a $500,000 mortgage. This gap is often subsidised by investors, effectively offering high-quality housing below market cost. Investors also then must pay the other ownership expenses like rates, insurance and maintenance. The investor subsidises the gap knowingly, often for several years. That’s not exploitation - it is a form of public housing support funded privately.

Capital Gains Are the Compensation for Risk, Not Greed

Critics often accuse property investors of greed when they seek capital gains. But capital gains are the natural compensation for the financial risks investors take. Let’s be honest. If you were topping up the expenses to own a rental property, you’d need a future payoff too.

You can't expect the private sector to provide rental housing at a loss and then penalise or scoff at them for expecting a return. That’s like asking someone to build a bridge for free, then complaining when they want to charge a toll for you to use it.

Property investment is akin to planting an orchard. The first few years yield no fruit, just costs. But eventually, harvest comes. The public enjoys the ‘fruit’ of housing supply instantly while the planter waits years for a reward.

If capital gains disappear, investors stop planting orchards. And then what? The state won’t fill the void. It can’t afford to. Councils can’t. Who will provide the next generation of rental homes?

“Topping Up” Isn’t Always Bleeding. It’s Strategic

Media narratives often frame negative cashflow as a sign of poor financial sense. But strategic investors view it as a calculated business decision. Just as startups operate in the red before becoming profitable, property investors anticipate short-term losses in exchange for long-term equity and passive income.

Over time, this dynamic shifts. Rents increase, mortgage payments stabilize, and the investment transitions from loss to profit. Dismissing top-ups as irrational ignores their role in a sound investment model.

Investors Are Filling a Critical Role Because Government Can’t

Let’s be frank: the government has largely stepped back from building rental housing. The burden has shifted to private investors. Yet, these same investors are often criticised for needing returns on their investments.

This contradiction is unsustainable. When policy swings, regulatory fatigue, and public criticism push investors out of the market, the result is fewer rental properties, greater competition, and rising rents - ironically, the very outcomes that critics fear.

A Call Answered: The Role of Private Landlords in Housing Supply

In recent years, the New Zealand government has publicly recognised that it can’t solve the housing crisis alone - especially when it comes to emergency and long-term rentals. In response, it encouraged partnerships with private landlords.

And many Kiwis answered the call.

From the baby boomer generation onward, everyday investors stepped up. Motivated by both practical incentives and a genuine desire to provide safe, warm, dry homes, they purchased quality properties in high-demand areas.

These investors didn’t just help meet an urgent public need; they also took steps to secure their own future. By building rental portfolios, they relieved pressure on the public housing system, both now and for the years ahead.

If every landlord sold their properties tomorrow, the rental system would collapse under pressure. Investors aren’t just filling a gap, they’re holding the structure together.

Investors Take Risks Others Won’t and Society Benefits

Property investors are often derided as greedy speculators. But they’re actually doing what few others are willing to. Take on high debt, operate at a cashflow loss, face uncertain policy settings, and provide housing, all while investing for a better tomorrow.

In doing so, they contribute to a healthier, more accessible rental market. That’s not greed; it’s faith in a system that, at its best, benefits everyone.