Rents on Decline Around New Zealand?
Rents on decline Around New Zealand??
Having read numerous articles over the past months regarding substantial increases in rent prices, mainly in Auckland, but also in other centres, it was interesting to read a particularly short article on www.stuff.co.nz on 8 May titled Rents on Decline around New Zealand – see article http://www.stuff.co.nz/national/4975746/Rents-on-decline-around-NZ-real-estate-agents
Having weathered the immediate storm of enquiry following the 22 February Christchurch Earthquake, it is very interesting to see how the Christchurch rental market is faring.
Weekly Rental prices are very much driven by supply and demand, and traditionally the market in Christchurch slows dramatically in the winter months. Speculation regarding a possible severe shortage of rental properties in Christchurch was rife following the September quake, and even more so following 22 February.
Initially this Christchurch Property Management office found enquiry following 22 February was extremely heavy. We also saw the numbers of rental properties being advertised on the largest internet site for rentals (www.trademe.co.nz) drop from well over 1000 to less than 800.
But steadily numbers have climbed and we are now in a situation of having more than 1400 rental properties being advertised in Christchurch on www.trademe.co.nz – numbers we have rarely seen over the past few years.
Tenants have excellent choice in most sectors of the market, are still able to compare the relative pros and cons for properties listed, and make their decisions to make a rental application accordingly.
Tenants are expecting good quality properties at fair weekly rent, with good heating and insulation.
So why are we still in a position where supply far out-weighs demand?
Consider the following possibilities:
Media recently reported that Christchurch school rolls were down by more than 5000 compared to this time last year http://www.stuff.co.nz/national/christchurch-earthquake/4992247/Christchurch-schools-fear-job-cuts-as-rolls-fall
So while many people who left Christchurch immediately after 22 February, it appears many have not yet returned, and may not for some time, if at all.
- The expected influx of contractors, workers, tradespeople and executives for the rebuild is does not appear to be in full flow yet, and this is likely to take some time
- People and families in damaged homes, still face the uncertainty of whether their home will be repaired or demolished, and may be waiting on a final decision before deciding to rent or not
- Insurance payments to cover rent for those having to move out of their home is very limited for some. Hence people may be waiting as long as possible before going out to rent a house while theirs is repaired
- The government is going to provide temporary housing for those in badly damaged homes, effectively increasing the numbers of rental properties available
So after several years of limited or minimal rent increases in the Christchurch area, it may take some months before demand picks up enough to have an impact on weekly rents.
Landlords will be eagerly anticipating the return of Christchurch residents and an influx of workers and contractors, hopefully well before the end of the year, to boost demand which will lead to increasing weekly rent prices.