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Rents set to rise as demand increases

Rent levels look set to rise, as pressure builds due to declining properties available and increasing demand.

Thursday, April 22nd 2010, 12:00AM 3 Comments

by The Landlord

First National Group's quarterly survey of its 70 New Zealand offices showed consistently increasing occupancy rates and the lowest vacancy rate for four quarters, halving from 6% in mid July to under 2.50% mid April.

First National's general manager John Stewart attributes the increasing demand to a lack of building, organic growth, continuing immigration, reduced emigration and shrinking of available stock.

"If the pressure continues, rising rental rates may not be far off."

Trade Me Property has seen a 20% drop in national rental listings for the first quarter of the year, which represents more than 10,000 fewer rental listings than at the same time last year.

The number of renters also appears to be rising, with the website seeing a 24% rise in email questions from renters compared to a year ago.

First National's survey recorded a quarter of properties managed by the company raising rents, with 51% recording no change and 23% having dropped rents slightly.

While some areas reported the usual flurry of changes, many said tenants were sitting tight.

"The property management industry has been in a state of flux since late last year when the government alluded to likely taxation changes for the sector," Stewart said.

"Certainly in some areas, landlords have been down-selling holdings, either in anticipation of taxation liability after the May 26 budget, or in advance of tenants voting with their feet through preferring warmer, dry, newer properties over old, cold and dreary."

Rent levels in Auckland set new records in March according to the latest research from Crockers and are now 23% higher than nationwide rental levels.

The quarterly Massey University residential rental market survey says Auckland regional rents are often a leading indicator to future national trends.

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Comments from our readers

On 23 April 2010 at 10:48 pm Patrick Rankin said:
My group of tenants seem to be settling in for winter, and the demand for property in the Mangere area is hot at the moment. No problem in replacing good tenants.
On 25 April 2010 at 9:19 pm Jim said:
This sounds like wishful thinking - taxpayers have been subsidising the landlords, not the tenants. Where is the demand going to come from? Setting aside trademe statistics, the vast majority of rents appear to have either held or are falling. There is only evidence that rents will only rise if landlords spend more money to upgrade or fix their properties. ie tenants will continue to get what they pay for. Rents won't rise unless the property in question is improved.
On 26 April 2010 at 11:03 am mel said:
it may sound like wishful thinking. Recently I replaced tenants, saw on trademe that there was hardly any listings in the Hutt Valley and put the rent up by $20 a week, the property was rented within 2 days of putting the ad on trademe. I have since put the rent up in another rental I own. Its simply this stage of the property cycle. You ask where the demand is coming from, net immigration of around 12,000 a year and then we have 70,000 people born...and stuff all building consents. Bit of a no brainer.
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Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 3.95 4.49
ANZ Special - 3.55 3.45 3.99
ASB Bank 5.20 4.05 3.95 4.39
ASB Bank Special - 3.55 3.45 3.89
BNZ - Classic - 3.55 3.45 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
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BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
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Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.35 3.35 3.35
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank 5.80 4.30 4.20 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.55 3.45 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - ▼3.55 3.39 3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.35 4.25 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.55 3.45 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.55 3.45 3.99
Median 5.34 4.04 4.09 4.39

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