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Capital's rents still rising despite tenant's market

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  • Capital's rents still rising despite tenant's market

    Capital's rents still rising despite tenant's market
    By CATHERINE HARRIS - The Dominion Post Last updated 05:00 10/07/2010

    Property managers in Wellington say rents in the capital have been steadily rising, despite the recent phenomenon of cheap apartments driving city rents down.
    Property management firm Quinovic estimates that over the past three years rents in central Wellington have climbed 17 per cent.
    Figures out from Trade Me Property this week support this, with average Wellington rents going up 5 per cent in the June quarter on a year ago.
    However, property managers admit that it is a tenant's market at present.
    A surplus of new apartments is putting pressure on rents in the central city.
    Elsewhere, the recession and wintery weather appear to be making tenants reluctant to move.
    The opening of 326-unit apartment building Soho is believed to be the main reason for nearly 100 extra properties hitting the central city market in May.
    But Quinovic's national business development manager Juliet Robinson said she believed the overhang was relatively short term.
    She hoped people would not be put off investing in Wellington city, which had been revitalised by the apartment boom.
    "There's always going to be a short-term period for adjustment when you get a large number like Soho released onto the market but that is a short-term phenomenon and our aim is that in 12 months, it will be a distant memory ... It's just a basic supply-and-demand issue."
    Quinovic Kent Terrace principal Matt Watson said there were more properties for rent in Thorndon than in the whole of Porirua.
    However, he believed the lure of cheap apartments was already attracting weary commuters.
    "Wellington had an undersupply of cheaper properties. They've now come on to the market and they've brought that end of the market into line with perhaps where it should have been."
    Jackie Teague-Thomas, of Rental Results, said she had heard of apartment dwellers moving to cheaper places if they were not locked into a lease.
    In the suburbs, people were less mobile but landlords were nervous and were sometimes undercutting their rents.
    "What's putting more pressure on rents is people who don't know really what their property is worth and underpricing them," Ms Teague-Thomas said.
    She felt the rent averages which came out of the Department of Building and Housing – based on bond lodgements – were too low and that landlords needed to get a better fix on what they could charge.
    "People are still prepared to pay good money, it's just taking a bit longer to find them."
    Trade Me says that demand for rentals certainly fell in Wellington in the June quarter, down 13 per cent on the same period last year.
    But supply – as measured by Trade Me listings – eased just 3 per cent, in contrast with a much deeper decline nationally.
    In the previous quarter Wellington's listings were up 15 per cent, so rental supply had actually dropped quite significantly, said Trade Me head of property Brendon Skipper.
    Apartment demand had also dropped by 10 per cent, "as you'd expect given the strong supply side of the equation," but supply jumped 20 per cent.
    Nationally Trade Me attributed an 18 per cent fall in rental listings to people "hunkering down for winter" and being less keen to shift.
    However, demand – or enquiries in those listings – surged 22 per cent.
    Lower Hutt reflected the national trend, with 27 per cent fewer listings but a 23 per cent increase in demand.
    And as demand rose, experts were predicting rents would too.
    The national average for a three-bedroom house, according to the Department of Building and Housing figures, was $330 a week during the first half.
    TradeMe's national average rent for the June quarter was $387.
    In Wellington district, the department's average was $462 in March, up just slightly from $458 last March.
    Trade Me estimated a three-bedroom city-centre house was renting around $516 at present, compared to $485 last June.
    Renting In Wellington: Average weekly rent rose 5 per cent in the June quarter, compared with the same period last year. There was no change for one-bedroom rentals, but rent for two-to-three-bedroom rentals was up 4 per cent and 6 per cent respectively. Listings of two and three-bedroom properties were static but supply in all other sized properties dropped. Demand for apartments dropped 10 per cent but listings jumped 20 per cent.
    Property managers in Wellington say rents in the capital have been steadily rising, despite the recent phenomenon of cheap apartments driving city rents down.
    "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