Rents stabilise, demand on the rise

Demand for rentals has increased over the past three months and rents have stabilised with rental growth looking healthy in some areas, according to First National.

Tuesday, October 27th 2009, 11:38AM

by The Landlord

The group's quarterly property management survey of its network offices across New Zealand shows vacancy rates of its 6,500 rental properties have decreased from an average of 6.30% to 4.90% in the past three months.

Across the nation rent-wise, 58% of offices reported rents being static, but 32% reported rent increases in at least one sector of the market, varying in amount between 1% to 20%.

The most notable average increase was in Taranaki where rents for properties around Stratford have gone up an average of 15% in the past three months.

Only 10% of offices reported rent reductions and these ranged from 1% to 10%.

Increasing, demand is putting pressure on stocks of three-bedroom properties and the majority of areas surveyed showed rents either stable or rising.

There was a vast increase in occupancy rates for the three months to October 16, with 69% of offices reporting a rise; 7% reported no change and 24% reported a decrease in occupancy rates.

The most dramatic changes were in Waiheke Island and Ashburton, which in July had unusually high vacancy rates of 21% and 18% respectively. Both have dropped to around 1.30% and 4% respectively in October.

First National general manager John Stewart believes that overall, the rental market seems to be settling, perhaps as a result of increased sales volume removing ‘temporary' rentals.

However, he says business closures, for example Bridgestone Tyres in Christchurch, would continue to affect house sales, causing unemployed people on one hand to sell or need to move to seek a new job and creating rental vacancies as tenants move on.

"Predictions proffered by the banking sector and economists are that unemployment will continue to grow through at least until the middle of next year, so this situation will need to be carefully watched by landlords and property management specialists," he says.

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