Most Active - Last 30 Days
Where have all the houses gone? - Hamilton
Where have all the houses gone?
ANDREA FOX AND ANGELA CUMING Last updated 05:00 31/03/2012
House rents in Hamilton could be on the rise soon as some real estate companies report a shortage and strong competition even for modest properties.
The city's biggest rental property manager, Lodge City Rentals, said it was experiencing unprecedentedly low vacancy rates.
General manager David Kneebone said the company's vacancy rate was at 1.12 per cent, the lowest he had seen in 15 years.
Hamilton was traditionally a "tight" rental market, with rentals in shorter supply from February to April, but usually the vacancy rate was about 3 per cent, he said.
Lodge rental manager Jason Waugh said the problem was not a hangover from the traditional New Year rush for student accommodation.
A professional client looking for a two-bedroom unit near the hospital waited for two months for a suitable property to come up, he said.
About 99 per cent of the 3288 properties on the company's books were rented, well above the usual rate.
"They are struggling in every suburb of Hamilton. We will see pressure on rents in the next few months," Mr Waugh said.
Harcourts general manager Brian King said rents were already rising in new areas such as Rototuna.
Lodge's Mr Waugh said an average three-bedroom house in a popular suburb like Glenview was fetching $340 to $350 a week. He expected this to rise, but by how much was unclear.
Lodge estimates about 35 per cent of Hamilton residents rent their homes, a similar level to other main centres.
Hamilton City Council puts the city's population at 142,000 with 50,000 houses. But real estate brokers tend to go by Statistics NZ's tally of 145,600 people.
Lugton's Real Estate rental manager Helen Robinson said the market was the tightest she had seen in 25 years. But she was not sure rents would rise. "It's hard to say, but I wouldn't think so and if it does, it'll only be temporary."
She had 19 parties in one day looking at a $350-a-week "average" three-bedroom Lockwood house with the garage near Lake Rotoroa, and 14 of them applying to rent it.
"It is seasonal and partly because people are not moving around. A lot of property investors are selling and not so many new investors are coming in. A lot of landlords are retiring."
Harcourts Mr King said "good" properties were renting very quickly. But poorly presented rentals in less desirable areas were slow to shift.
"There is certainly a lot less available. A lot of people are coming into the city for work – the Waikato business sector is stronger than most people realise. There's more confidence, a bit more hiring."
Lodge managing director Jeremy O'Rourke said the shortage was no surprise. BNZ chief economist Tony Alexander had been warning for a long time that building consents were not enough to sustain population growth.
Hamilton landlord Graham Dwyer said that from anecdotal evidence it appeared the supply-demand balance was changing to a shortage. But there was no point putting up rent to capitalise on it.
"You need a clear view of what's ahead. There's no point if it [the rent] just has to come down again."
"There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx
time to make some more money? Does that sound greedy? Maybe I should have said - time to recover some cost increases.
that's be good for investors in hamilton. anyone have any investments there?
I think there are oneor 2 rentals in Hamilton
Exactly. Property investor costs are constantly going up, so landlords really do need to put up rents.
Originally Posted by Wayne
Insurance - need I say more
All these items seem to going up! Plus investors have lost building depreciation. Say your buildnig was worth $150k, you have lost a depreciation deduction on the building of say $4.5k, therefore you will be paying $1,300k extra tax.
Property investors really need to be increasing their rent by at least $30 per week to get this lost depreciaton back, and start to cover some of the extra insurance and rates costs.
If you have owned your properties for long term, say 10 years. Have you compared your rent to inflation?
Ie $250 10 years ago, should go up $7.5 approx per year (3%), and now be at least $325.
I bet most investors rent have hardly gone up over 10 years!
I bought my first place 16 years ago. Value has more than tripled. However rent has only doubled(exactly doubled too). I'd say the price of most other items would have more than doubled in the past 16 years, and that there is room for rents to increase.
My insurances are up 60% on last year, and the loss of depreciation is having a major impact already.
On one hand it sucks that rents are static, costs are rising, and we are paying more tax without making any more income.
But on the other hand the fact that investors are being forced from the market, that building consents are way down, and safe in the knowledge that all these government initiatives are going to have the opposite effect to that intended, I think we can all breathe easy that we can reap even greater rewards in the years to come...
Originally Posted by Rosco
There is talk in Christchurch of imposing rent freezes. Smoke/Fire?
Originally Posted by spurner
Spurner, interesting take on things. And always interesting to hear how you are going.
Originally Posted by spurner
Insurance up 60%? Wow. My insurances went up around 10%. Difference between Auckland and Wellington I guess.
Loss of depreciation, yep, the govt needed to be seen to be doing something against those dirty property investors I reckon. Unfortunately it affects the end users in the end.
Investors forced from the market? They are re-entering here in Auckland. Starting to make sense again with the rent rises up here.
Building still at very low levels but is starting to increase.
Just imagine what would happen if heaps of people weren't leaving for Aussie right now? If immigration turns around, rents and house prices will go through the roof!
I agree there's good times ahead...
Well both rents and profits have increased every year for the past 16 years so property is still working for me. Despite the tax changes and insurance/cost increases, I think the 5.x% interest rates should more than off-set the negatives, at least for anyone who has any decent chunk of borrowings.
I've been overseas a lot recently, but the time I have spent at home I really noticed that the rental market in Welly isn't firing on all cylinders, mostly caused by the reduction in government spending, and especially that they're targeting the admin workers who tend to be based in Wgtn. But all my flats are full, and overall rents are up 3% on last year, so not sure if I'm really allowed to complain. I think the (good) area I've invested in has offered a level of insulation.
With no negative gearing, no depreciation, tougher rental laws, and the never ending threats from politicians of further punishments to be inflicted upon anyone who dares invest in such unproductive assets as housing people... it's a wonder there are still people investing at all. The fact that there still are, in some ways, just shows how good an investment it really is, and how terrible the alternatives really are... Was watching Campbell Live On Demand yesterday, and the Financial Advisor who reassured an elderly lady her life savings would be safe in Bridgecorp, after the finance companies had already started collapsing!
I think the rent rises up your way have definitely piqued interest in becoming a landlord up there, and hopefully it'll spread out in the next couple of years. You're right though, immigration plays a huge part and I think has been static/borderline negative for quite some time now. As soon as we get back to +30k net arrivals, or Labour gets back in and loosens the purse-strings, there's nothing stopping a mini-boom from generating.
I think we have to be positive, see the good times ahead... if not, then can we really do what we do?
Originally Posted by Davo36
My experience is same as Spurner's. I think that difference is quite suspicious. Possibly because of when your renewals came through Davo ?
Originally Posted by Davo36
Worth a few more comparisons though -- can people in Auckland ChCh, Wellington post house value and insurance please.
Here is an example well maintained 3 brm, rental, building value $300K insurance $1100. Would have been 700-800 last year (which in itself had already been hiked following ChCh earthquake)
We know we get dicked around by insurance companies most of the time--they now have excuses to do that.
<Sotto voce>That should bring the insurance industry plans into the discussion.
Users Browsing this Thread
There are currently 1 users browsing this thread. (0 members and 1 guests)