Are rent rises flattening out?

[Shane D]

My feeling is rent rises are flattening out i.e. rents not rising anymore. The was a lot of media hype before winter about 100s of people lining up at rent open homes (in Auckland central suburbs) and rents going through the roof.

I just chatted with an Auckland property manager yesterday. She was saying she is having real trouble renting properties all over Auckland this winter. She did say the one exception was the North Shore Bays but this is probably due to lack of rental properties in the bays. I amagine the bays are largely owner occupied and the area is not a hot bed for rental properties.

What are you guys seeing this winter in terms of ease/speed of finding good tenants as well as rental prices achieved? Any hot spots that are still renting easily and still get steady rent rises?

Shane

[eri]

as mentioned in other threads auckland central does seem extra quiet at the moment

wonder if it has much to do with students being down and record flight to australia...

[flyernzl]

I rented out a medium/lower-class 2brm unit in Manurewa in July and had plenty of applicants through TradeMe at the asking of $285.

[Shane D]

I rented out a medium/lower-class 2brm unit in Manurewa in July and had plenty of applicants through TradeMe at the asking of $285.

flyernzl,

I would say $285 is a little on the light side for a 2 beddie in Manurewa. Which reinforces what I was saying that rents are no longer rising. Although it does serve as a good example of what you need to attract a good pool of tenants i.e. price the rent a little under market :-).

Shane

[Shane D]

as mentioned in other threads auckland central does seem extra quiet at the moment

wonder if it has much to do with students being down and record flight to australia...

Always good to get feedback from the guy with his finger on the Auckland CBD apartment market like eri does.

My theory on why the rental market is so quiet
- Students and families cramming more people into properties. for example in the good old days a couple may have rented a 2 beddie and kept the other room for storage/home office etc where as now 2 x couples would share

- Younger people staying at home with mum and dad or moving back home if they were flatting before

- Financially better-off renters buying their own properties with the low interest rates and bank loan easing making it possible now.

Shane

[AMR]

I have noticed the same thing. It seems a lot of the renters who can afford to purchase property at 5% deposit and 4.9% interest rates have begun doing so.

The other side of the equation I have noticed is a reasonably large influx of investing interest. Out west where I look I have noticed a number of property purchases end up on Trade Me right after settlement (the new purchasers pay too much in many cases, probably achieving about 6-6.5% gross rents). As a result the number of rental listings in my suburb has doubled since April 2012 and rents are back to 2009 - 2010 levels.

IMO it looks like the two speed economy is starting to take down the rental market. I wonder how long the capital gains bull market (for investment grade properties) can go on once the rental market starts to turn.

[eri]

yes, there does seems to be a slow drift of other investors into rental property

as the least worst investment in the current environment

they will be finding that they are expected to pay more than the properties were selling for last year

rates are going up

and rents may be slipping from march this year...

[Davo36]

Well I've just had a tenant leave one of my apartments at Papakura. It was a couple and her mother is sick so they have had to move back in with her to look after her.

And so the property manager advertised the place at $10 more, $350 per week now. And there were no enquiries for 2 weekends running. So I was getting a bit worried because normally there's like 3 or 4 parties that want these apartments when they come up. Was just about to drop the rent back...

But we have signed up a good new tenant. Signed up before the other left but there will still be a 10 day gap with no rent, but that's not too bad I guess, good just to have a suitable tenant signed up for a year.

So this was definitely a bit quieter than what I've seen in the past which I put down to 3 things:

1) I'm asking quite a lot of rent for a small apartment (in semi-dodgy Papakura!).

2) It's winter. So cold and rainy out there right now.

3) Immigration figures: I was listening on the radio while in the car yesterday and over the last month there's been a lot of people go to Aussie again, net loss for the country of a few thousand I think of those leaving over those arriving. So this doesn't help. What we need is for the Aussie economy to tank and for 10% of the 500,000 kiwis over there to come home!

I think rents might pick up again over summer.

[Nice]

Surely we go through this every year, and every year we soul search for the answers ?

To me it is relatively straight forward (not that it stops we worrying about empty rentals, thus trying to avoid them), the student population is relatively settled at this time of the year ??

While we are not all wanting student tenants, the shear volume of them at the start of the year gets the whole market moving. Mid and end of year, this drops, thus the whole market slows.

Best answer is to be prepared, get all tenants on fixed term leases that run January to January. There are always exceptions though, but best to minimise them.

[Orkibi]

i just talked to my PM and YES the rental market is slower now and this is everywhere in AKL.
One can still get good rents in Central Double grammar zone etc but don't expect any further strong growth as we had 3 month ago.

This is also the same in Christchurch.

[ammar]

As a tenant,

The LL wanted to increase the rent by $25 on top of $400 (Auckland City). I said no and gave him example of a similar nearby house of two bedrooms which was just rented for $380. If he had insisted on increase I would just left and bought a property, I am still searching. The rent is no big difference from mortgage payment.

[muppet]

The rent is no big difference from mortgage payment.

And there lies the crux of the matter.
L/ls therefore need to be aware that if rents get too high then tenants
will buy.

[buxlo122]

Surely we go through this every year, and every year we soul search for the answers ?

To me it is relatively straight forward (not that it stops we worrying about empty rentals, thus trying to avoid them), the student population is relatively settled at this time of the year ??

While we are not all wanting student tenants, the shear volume of them at the start of the year gets the whole market moving. Mid and end of year, this drops, thus the whole market slows.

Best answer is to be prepared, get all tenants on fixed term leases that run January to January. There are always exceptions though, but best to minimise them.

I agree with Nice. Did they magically build a shit load of houses in Auckland overnight? No they didn't.

This is a just a seasonal slump. In Jan/Feb there will be articles in the paper exclaiming the rental shortage like the it is the end of the world.

[flyernzl]

Best answer is to be prepared, get all tenants on fixed term leases that run January to January.

As I know to my own cost, fixed term is not unbreakable. If a tenant wants out then they can get out.
For instance, they can just stop paying the rent.

The rent is no big difference from mortgage payment.

As certainly should be the case.
Think rates - insurance - maintenance on top of your mortgage payment.
No small sum.

[Nice]

. . fixed term is not unbreakable. If a tenant wants out then they can get out.
For instance, they can just stop paying the rent. . . .

No, there are few certainties in life, and this sure ain't one of them ! Fixed term leases certainly 'encourage' them to stay around for the full term though, and they certainly reduce the number of vacancies at this time of the year.