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Rents at two-and-a-half year high, but OCR set to rise

Rents are at a two-and-a-half year high "and will go higher", according to the latest ANZ Property Focus.

Monday, July 25th 2011, 12:00AM 1 Comment

by The Landlord

The report also noted building approvals strengthened in May and house sales sustained this resurgence in June. The days to sell also improved in June to its lowest level in 13 months despite weak immigration as, "the market is slowly building momentum."

The ANZ Property Focus includes the ANZ Property Gauges, 10 gauges the bank uses to assess the state of the property market and look for emerging trends.

Of the 10 gauges, two point to house price rises, three indicate either rises or no movement, four suggest falls and one is neutral.

Both median rent - at a two-and-a-half year high and predicted to rise further - and interest rates point to price rises.

Supply-demand balance, consents and house sales and housing supply all point to either rises or no change, with time to clear market at an 18 month low and sales picking up.

Migration - with fewer immigrants and more emigrants, affordability, liquidity and serviceability/indebtedness all point to price falls as affordability has shown little improvement over the past six months and households continue to repay debt.

Globalisation, relative property price movements between New Zealand, the US, UK and Australia, remains neutral.

ANZ also said mortgage rates had not changes for three consecutive months and that the last time they remained static for this length of time was in 1992.

"But this record is on borrowed time. Given the inflationary pressures building, it is only a matter of time until the Reserve Bank says enough is enough and reverses the emergency cut that they made to the Official Cash Rate."

« Capital gains tax won't move money from housing, claims BNZ economistThe economists view on the OCR decision »

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Comments from our readers

On 27 July 2011 at 9:02 pm Andrew Shead said:
Rents are still well under what they should be across the country. How many landlords out there breakeven or are making money after expense from their rentals? is it 20% I'd like to know, yeilds are dismal on average around 3%? I've been subsidising my tenants and I have over 50 of them for the past 6 years - rents need to rise at minimum to keep pace with inflation and at worst to keep up with rising costs of councils who raise their rates every year anywhere between 3-7% insurances rises of 30% plus and then the OCR when 'they' decide that we have it too good and want to take that supposedly low cost borrow away. Lets wake up here we are being totally screwed by the banks the OCR is at 2.5 yet the average variable is at 6? 3.5% margin for the Aussie banks. It should be peged at 1.5 - 2% maximum like it is in Europe really who controls our rates - look how ineffective bollards increases were in 2007 when the majority of the popn was on fixed - and I'd say the same will happen again, if the banks are capped on their margins then the OCR becomes a more effective tool, however the only tool here is Bollard.
Of course GST has increased inflation and oil prices on everything and then the Aussie supermarkets - we are run by Australian companies who rake us hard - can't think of the last conversation I had with anyone who was killing it out there quite the opposite - its misery for many including many of my tenants who I will ultimately have to stop subsiding and increase their rents not to add value to the houses they live in but to pay my Australian bank - thanks to Bollard and his clever men the money will just flow out of the country even faster and any chance of real growth - burned off.
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Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.15 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online 2.95 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.50 3.40 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.45 2.65 2.79
Kainga Ora 4.43 2.93 3.07 3.24
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
SBS Bank 4.54 3.05 2.99 2.99
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 2.55 2.49 2.49
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 2.79
The Co-operative Bank - Standard 4.40 3.05 3.19 3.29
TSB Bank 5.34 3.29 3.45 3.59
TSB Special 4.54 2.49 2.65 2.79
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.15 3.29 3.39
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.69 2.79
Median 4.55 2.95 2.99 2.80

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