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A cup of sweet tea and a blanket

Wednesday, March 23rd 2011, 6:16PM 2 Comments

by Philip Macalister

If you’re an Auckland landlord, get out the cups of hot tea and the emergency blankets, because apparently your tenants are going to contract a serious case of rent shock.  You’ve heard of ordinary shock, diabetic shock, and perhaps even toxic shock, and you certainly wouldn’t want any of these unpleasant conditions.

Yet rent shock is a disease unlike any of these; and the horrifying news is that your doctor can do nothing to treat it.  This rare condition is brought about a rapid rise in rents – symptoms include a horrified expression, irritability, and a feeling of lightness about the wallet region.  Treatment is extreme: Pony up or move to Wellington.


Auckland rents are at record levels, reflecting a massive imbalance between demand and supply.  Now is a very good time to be an Auckland landlord, with brainy APIA president David Whitburn predicting rent rises of up to $150 during 2011.  If you listen to some stories, tenants are foaming at the mouth, throwing handfuls of money at landlords and pick-axing the knees of competitors.  (No, wait, that was Tonya Harding.  Well, you get the picture.)

Apparently, there’s a massive shortage of rental accommodation in Auckland, caused by a number of factors – the displaced Cantabrians are just the tipping point.  The past three years have taken their toll on landlords and aspiring landlords, from the global financial crisis to the tax changes.  The construction industry has had a similarly hard time, so too few new buildings are being created to house the increasing population of Auckland.

It’s not going to improve quickly.  Not only are new builds not going to pop up overnight, but first-time buyers are going to look at the cost of servicing a mortgage versus the cost of rent and start talking to their banks.  So Auckland landlords are going to be enjoying high rents for some time to come, and there ought to be some trickle-down to the rest of the nation’s centres, too.

So keep your rent somewhere near the market rate and enjoy it, because after the past few years you’ve earned it.  Just keep the Twinings and the Gingernuts handy, because that rent shock isn’t going to wear off anytime soon.
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Comments from our readers

On 28 March 2011 at 12:19 pm Jerry said:
Keep dreaming, I'm paying less rent than I was 2 years ago.
On 30 March 2011 at 11:16 pm Beet said:
As a long-time private landlord running a business, is it only me who finds these comments re tenants a bit puerile? Whether these predictions are exaggerated or not, it's just market forces at work, like any other business, and if we have a catch up in rents then it will feel like we are running a profitable business again, so good. But I don't feel any need to 'gloat' about it and make silly suppositions with regard to effects on tenants?
Commenting is closed

 

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.24 6.79 6.65
ANZ 8.64 7.84 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.24 6.79 6.65
ASB Bank 8.64 7.24 6.79 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.24 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.84 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.04 - -
Co-operative Bank - Owner Occ 8.40 7.24 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.74 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.69 6.45 6.19
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.75 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.25 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.25 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 ▼8.09 ▼7.59 ▼7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 ▼9.09 ▼8.59 ▼8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.84 7.45 7.25
SBS Bank Special - 7.24 6.85 6.65
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.74 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.04 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.24 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.49 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.89 6.65
Median 8.64 7.29 7.32 6.65

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