Thursday, 5 July 2012

Rental 'crisis' sweeping the country - real estate expert

Landlords could start hiking prices for rental properties after a few years treading cautiously through the recession, according to the head of a real estate company.

Dwindling construction, subdued property developer investment and the cost of consents have helped fuel a rental property shortage throughout the country.

And while Auckland and Christchurch are feeling the pinch most, general manager of First National Colleen Milne told TV ONE's Breakfast it is a "crisis" because the problem is spreading across New Zealand.

"We're calling it a crisis because we've seen a significant lack of rentals available across the country," she said.

"We've known that Auckland and Christchurch have experienced low vacancy rates but we've seen that spread across different areas like Whakatane, through New Plymouth, Cambridge down in Nelson - so it seems to be spreading across the country."

Because of the shortage, Milne said landlords and property managers can edge up their prices.

Nationally, 42% of First National property management offices say rents in general have increased from a year ago.

"We may be seeing some increases over the next year or so," Milne said.

"Responsible landlords, responsible property managers are putting up the rent at reasonable 5% or 10% where they can. You've got to understand that some landlords have not put up rents for a number of years, they've been cautious with the global financial crisis with affordability."

At the moment, that increase is translating to about $50 extra tacked on to weekly rental payments all over New Zealand, according to Milne.

"In Auckland I would say on a whole it's probably about 50 dollars a week. Christchurch it's quite significant, recently in Ashburton a property that rented at 300 dollars at the beginning of the year is now renting at 340, 350."

But Milne told Breakfast landlords want to hang on to their good tenants, and most are still asking for reasonable prices for their properties.

She said for tenants trying to stand out from the crowd when competing for a property, they should prepare for getting the property like they would for a job - with all references, as well as the money, at the ready.

Rental pressure builds in Christchurch

The heat is still in the Christchurch market and shows no sign of cooling off, according to Trade Me property analysis.

Trade Me's data showed the number of enquiries from potential tenants soared 47%. Brendon Skipper, the head of Trade Me Property, said this pressure is flowing through to prices.

"The news for prospective Christchurch tenants is still grim, with rent sky-rocketing an average of 26%, in stark contrast to the national rise of just 4%," he said.

The three pressure cooker areas in Christchurch were the central city, Linwood and St Albans.

Property numbers "plummeted" more than 40%, according to Skipper.

"On the flipside, the properties that do get listed are attracting huge volumes of enquiry. For example, in Linwood the level of demand is up 101% on last year," he said.

Skipper said this trend will drive buyers to look in other areas for a place to rent.


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