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Rental Rate Increases: 2022. Annual Rent Reviews

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  • Rental Rate Increases: 2022. Annual Rent Reviews

    Given the decline (or should that be crash?) in the purchasing power of the NZ dollar, what sort of 2022 annual percentage rental rate increases are you considering to keep pace with inflation? The RBNZ figures for housing are around 23%!!! The 'official' fantasyland figure for inflation is 5%.

    Years back, some of us did some informal work / calculations to try and get a more accurate figure on the reality of day-to-day purchases and their price increases. (We ignored hedonic stats!) We came up with this formula:

    Starting with the 'official' fantasyland 5% figure, multiply by two and add two - to get a more realistic idea of what inflation actually was.

    That comes out to 12% - half the RBNZ calculator's housing price inflation increase figure.

    As comrade Grant RobuSome has borrowed somewhere around $200 billion (plus or minus 20), I suspect that means inflationary increases are very unlikely to go away, any time soon.

    Presuming a weekly rent of $400, here are three weekly increase figures . . .
    5% = $20 per week;
    12% = $48 per week;
    23% = $92 per week.

    What to do, what to do . . . .

  • #2
    Originally posted by Perry View Post

    What to do, what to do . . . .
    Whatever you do, remember that increasing rents shows up directly as inflation.
    The speed with which rents are increased will almost exactly dictate the rate at which the interest rates on loans are increased.

    And once that upward spiral is engaged, it will create another cost and therefore rent increase and so on.

    New legislation will then almost unavoidably have to be introduced.
    You won't like the new legislation.

    If at all possible, moderation will be your friend here.

    Comment


    • #3
      Originally posted by McDuck View Post

      Whatever you do, remember that increasing rents shows up directly as inflation.
      The speed with which rents are increased will almost exactly dictate the rate at which the interest rates on loans are increased.

      And once that upward spiral is engaged, it will create another cost and therefore rent increase and so on.

      New legislation will then almost unavoidably have to be introduced.
      You won't like the new legislation.

      If at all possible, moderation will be your friend here.
      Last weeks list of issues
      dishwasher repair
      deck repair
      gas top oven to be replaced
      dismantle & pick up my scaffolding from a 2 storey property that’s just been repainted.
      proof repair
      Other minor shit

      So Moderation is not the top of my list come rent review time.
      Our Rent increases this year on the Shore are around 10 percent , many higher.

      But get your point

      Comment


      • #4
        For some insight into what may happen with rents in NZ, Australia abolished negative gearing from 1985-1987.

        In that 2 year period, According the Australian Bureau of Statistics Consumer Price Index Table Sydney rents rose by 31.9%, Melbourne rose by 22.9%. Perth rose the most by 33.5%. In all, five of the eight capital cities rose by more than the CPI increases over the period Negative Gearing was repealed.

        But.....without trying to state the bleeding obvious vacancy rates was a big determining factor.

        In other words, rents can only rise if there's a shortage of a particular type of property in a certain market.

        Its also pretty obvious which properties are going to be in short supply in the future with associated rent increases....

        Comment


        • #5
          One puzzling aspect of inflation is what's chasing what across buying and selling?

          Comment


          • #6
            Originally posted by Perry View Post
            One puzzling aspect of inflation is what's chasing what across buying and selling?
            I used to wonder that.
            but it was the wrong way to look at it.

            Inflation isn't the loop of buyers an sellers and employers and employees wanting more money to cover increasing costs..

            That's all just a distraction.

            Since inflation is a ratio, the ratio of NZ dollars vs goods and services.

            And since the Reserve Bank and the Trading Banks are the only people that can increase the amount of NZ dollars *..

            That's where inflation comes from.

            With time I've come to understand that the Treasury also has a little back door deal going with the Reserve Bank, to enable them.

            They swap worthless paper in order to pretend something isn't created out of nothing.

            There's so much more fine detail, in order to see the con in it's full form, but this is a good simple overview.

            Are the institutions out of control and running like some sort of autonomous shadow government?
            Seems so to me... but what do I know.

            Sidetrack, MBIE is my biggest shadow supervillain in this story.
            Last edited by McDuck; 13-12-2021, 06:34 AM.

            Comment


            • #7
              Originally posted by Perry View Post
              [...]

              Presuming a weekly rent of $400, here are three weekly increase figures . . .
              5% = $20 per week;
              12% = $48 per week;
              23% = $92 per week.

              What to do, what to do . . . .

              What to do? Market research is one possible answer.

              How much are similar properties in the location renting for? Also a good idea to glance at market rent data provided by tenancy services.

              Comment


              • #8
                Originally posted by Sanya View Post


                What to do? Market research is one possible answer.

                How much are similar properties in the location renting for? Also a good idea to glance at market rent data provided by tenancy services.
                This reminds me of the fable of the Scorpion and the Turtle.

                Comment


                • #9
                  I can only get the vaguest notion, that way. There are very few stats available for rural rentals.

                  Because of some minimum number required before stats will show and the way TS have now analysed bond lodgements by suburb, there is almost always no data for the area I'm checking on.

                  Faecesbook is a mystery to me and I don't like it, anyway. (A personal prejudice)
                  Nothing useful on TM, either. Well, by that, I mean almost no results from a search by locality.

                  But thanks for the suggestions.

                  Comment

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