Insights
Ethical Hotline: Investment Properties
If I buy (another) investment property, does that make it harder for people trying to buy a home to live in?
Q: If I buy (another) investment property, does that make it harder for people trying to buy a home to live in?
Great question!
Housing can be both an investment generating a rental income or an asset you buy and choose to live in. In each case, where housing meets quality standards, there is a social good satisfying our human right to a decent home.
Let’s look at buying an investment property and whether this could make it harder for people looking to buy a home & live in it.
When investment buyers and owner-occupiers intersect:
Investors and first home buyers can often compete at the lower and median end of the market. So, if investor demand is strong, it can raise entry-level prices for everyone. This particularly applies when supply of housing suitable for first home buyers is tight, which was a feature of the New Zealand property market from 2020 to 2022. This isn’t such a stark issue in a weaker market like Auckland is currently.
In addition, there are also some property types or locations that aren’t always desirable for all first home buyers. For example many do-ups require significant expenditure and larger residences can be better suited for use as a boarding house. This means whether first home buyers and property investors are competing can be property or location specific.
Why the property market can be inefficient:
New housing supply typically responds slowly to increased demand from property buyers. For new builds this can be because of the time it takes to consent and build. For existing housing stock it can be because homeowners often take time to respond to rising prices and decide its time to sell. Until there is equilibrium in the market with additional supply, more capital chasing existing stock tends to produce higher prices rather than produce additional homes.
What this means for an investor competing with a first home buyer:
As a landlord you absolutely can be ethical and provide a social benefit. Below are two thoughts:
Firstly, there's real value in being a good landlord providing quality housing for people who choose to rent. If you can provide one that's safe, warm, dry, affordable, accessible and culturally adequate then you're actively doing something good.
Secondly, as an individual looking to purchase an investment property, one thoughtful approach could be considering buying a new build rather than existing stock. When you buy an existing home as an investment, the total number of homes in the city stays the same, and a home buyer may miss out. But when you invest in a new build (especially buying off the plans), your capital enables construction that often would not have occurred otherwise, because developers need pre-sales before banks will advance construction finance. At least in this version you buy knowing you’re adding a home to the city's stock.
Finally, it is worth noting there is an alternative to buying residential property that investors can consider. You can instead invest in listed property funds to gain exposure without buying a property at all. And you save on rates & maintenance costs! Listed property trusts typically cover industrial, office and/or retail property (rather than residential) and generally pay dividends to provide an income stream for an investor.
Hope that helps give you some perspective while you decide what makes practical, moral and financial sense to you.
The views expressed here are of a general nature and are not specific to Pathfinder's product. We edited this article to expand on some of the core ideas on 25 June 2026.
