Wellington rental market - shortage of rentals? or shortage of AFFORDABLE rentals?

[Chris W]

1) There are currently 462 properties in Wellington looking for a flatmate on trademe.co.nz.

2) There are currently 216 one bedroom places listed for rental in Wellington on trademe.co.nz.

3) There are currently 1,032 properties listed for rental in Wellington on trademe.co.nz.

There are lots of places available for this student to stay for accommodation. (obviously he isn't going to be able to afford a whole house by himself, but he could look for flatmates)

So why is this guy choosing to sleep in his car instead? He doesn't want to pay the current market price of renting perhaps? Perhaps it is too high for his budget?



Wellington student lives 18 months in van to dodge record rents in capital city

A student says he has lived in a van for the past 18 months to dodge record Wellington rents, which have now surpassed average Auckland rents for the first time.


Jonathan Ford, who is now trying to sell the van to fund travel in Asia, boasts on Facebook said he worked and studied fulltime while living in the van and it was "the best year of my life".


"I had freedom and slept in the most beautiful places around. I had showers at the gym everyday and ate the best foods," he writes.

"Because of this lifestyle I saved so much money and it's time to spend around Asia with one-way ticket."



His post came as it was reported yesterday that Wellington's median weekly rent rose 8.2 per cent to a record $565 a week in the year to December.


In the same period Auckland's median rent was static at $550 a week.


Wellington's median matched the Auckland median for the first time in November and surpassed it in December.
In contrast, in the rest of the country the national median rent remained stable for the fifth month in a row at $480, although this was up 4.3 per cent from a year earlier.


Ford's post, on the Vic Deals Facebook page, has drawn 110 comments so far including many people suggesting that their friends should adopt the same solution to the rental squeeze.


KerryAnne Butler asked: "Where did you park? There's all these rules now about freedom camping. I did it for a week to have a holiday and got caught out a couple of times. No fines thankfully."


Ford replied: "Never had problems in 1 year and half."
Chantel Calverley posted: "I did it for just over a month with my two kids. All over the north and south islands last summer. We showered in the changing rooms at swimming pools. I had money to stay at hotels, but it seemed like such a waste."
Ford responded: "Yea I stay away from campers lol theres enough bad reputation as is. Well done, and yes you are right, it is a waste, its much better sleeping by the sea looking at the stars and use the money for things more important."
Median rents Dec 2018

$565 Wellington City, up 8.2 per cent since Dec 2017
$550 Auckland City, unchanged
$500 Tauranga, up 8.7 per cent
$500 Blenheim, up 16.3 per cent
$430 Hamilton, up 7.5 per cent
$420 Hastings, up 16.7 per cent
$415 Napier, up 9.2 per cent
$415 Nelson, down 0.6 per cent
$410 Whangārei, up 3.8 per cent
$400 Christchurch City, unchanged
$390 Taupō, up 11.4 per cent
$385 New Plymouth, up 6.9 per cent
$370 Rotorua, up 5.7 per cent
$370 Palmerston North, up 5.7 per cent
$360 Dunedin, up 1.4 per cent
$320 Whanganui, up 25.5 per cent
$295 Invercargill, up 9.3 per cent


Source: https://www.nzherald.co.nz/property/...ectid=12195490

[Don't believe the Hype]

The simple answer is that this individual doesn’t see value in a house for the given price. He does however see value in eating well and his gym membership.

This is a nothing story - he could very well have had the money to pay for a fixed address but his priority for spending his money put other things first. Which is 100% his choice but it doesn’t mean it’s everybody’s choice or that rents are too high.

[absoluteproperty]

The problem I have seen from my own personal view, is that there is so little difference (in Wellington City) between the cost of a 2+ bedroom space, and a 1 bedroom space - but the 1 bedroom space being too expensive for anyone other than someone working in a well paid job full time to afford.

In one of the buildings I own in, it is 530+ for a 1 bedroom, and 650+ for a 2 bedroom.

Looking at this through the eyes of a student, 530 is too expensive to live alone. 650 split two ways at 325 each is still too expensive to live with others.

Add expenses on top of that, and you have a situation that is economically out of reach for many.

The "cheap" places in Wellington, are mostly in the outer suburbs and beyond (that is fine, but factor in transport costs on top of the cost of rent) and are commonly poorly maintained, breezy. There are several multi-property landlords well known to students in Wellington (2nd year students know, 1st year students learn by personal experience in many cases) who rent out these dodgy, sub standard, breezy and damp spaces at basically the same cost as something nicer. Some of these landlords are even brazen enough to advertise their properties directly on the Vic Deals facebook group (I am a member there, and give things away to the student crowd when I can).

The council needs to bring in rental WOF, with no additional cost burdens on landlords, in a way which will not impede their ability to rent a property (e.g. FREE, with the inspection taking place at least 1 month prior to the current WOF expiring, and issued for 13 months).

The supply vs market price issue is something I have not looked at closely, but would love to see solved.

[Nick G]

Students should stick to the 3-5 bedroom places, room rentals are cheaper there.

[Perry]

The council needs to bring in rental WOF, with no additional cost burdens on landlords . . . .

So Ratepayers pay for this pointless extra exercise cost of hi-vis-vest, clipboard-toting bureaucrats?

The simple answer is that this individual doesn’t see value in a house for the given price. He does however see value in eating well and his gym membership.

That's about right. Different priorities, different prices.

Wonder how mush he'll get for the van?

[Nick G]

God please no extra intervention from the WCC. They do enough.

[mrsaneperson]

would it possibly be more appropriate for the title to be:

Wellington rental market - shortage of rentals? or shortage of decent tenants?

Just that here in Auckland that is my own experience .

[Perry]

God please no extra intervention from the WCC. They do enough.

damage?

[Nick G]

Of everything.

Wellington has a lot going in a confined area, with 2 campuses, government, many large firms, port, hospital all in the central city. At the same time it is very expensive to build there, there isn't any new land unless you go quite a way north and the WCC is in disarray with the current mayor favoring cycleways and photo ops over infrastructure. Incomes are on par with Auckland. If you can make it work it is a good place to invest. Not easy however, as with any market you really have to know what you're doing and avoid the lemons.

[absoluteproperty]

Of everything.

Wellington has a lot going in a confined area, with 2 campuses, government, many large firms, port, hospital all in the central city. At the same time it is very expensive to build there, there isn't any new land unless you go quite a way north and the WCC is in disarray with the current mayor favoring cycleways and photo ops over infrastructure. Incomes are on par with Auckland. If you can make it work it is a good place to invest. Not easy however, as with any market you really have to know what you're doing and avoid the lemons.

And there are lots of lemons, new and old. The locals can tell you, but only after they bought the good ones. I live in Wellington but as an ex Aucklander, to an extent certain groups operate something akin to secret societies in many respects. Social circles to a large extent revolve around school/uni circles, or old family friendships. These same groups dictate business dealings, in many cases. It is a very different place to operate than Auckland. Some things are wonderful, some things can be difficult to adjust to.

And yes, I agree WCC intervention would be a hassle. I apologise for suggesting this might be a positive.

[Learning]

The council needs to bring in rental WOF, with no additional cost burdens on landlords, in a way which will not impede their ability to rent a property.

I'm with Absolute on this one. I've spent thousands on improvements, efficient heating, insulation, etc and thanks to property shortage I'm getting the same rent as the "wouldn't spend $2" slums next door.

When there's not enough competition the bottom of the barrel can demand the same (or near) returns as the top. They can get away without providing the minimum standards because the tenants are too afraid of getting kicked out if they make a fuss.

[Don't believe the Hype]

I'm with Absolute on this one. I've spent thousands on improvements, efficient heating, insulation, etc and thanks to property shortage I'm getting the same rent as the "wouldn't spend $2" slums next door.

When there's not enough competition the bottom of the barrel can demand the same (or near) returns as the top. They can get away without providing the minimum standards because the tenants are too afraid of getting kicked out if they make a fuss.

i don’t understand this. If the slums charge what you do, why is it that you can’t charge more?

[Learning]

i don’t understand this. If the slums charge what you do, why is it that you can’t charge more?

There are so many looking for rentals that the slums can ask top dollar and there'll be someone desperate enough to pay it.

I kept my rents "reasonable" so if/when the market drops I'll have a better chance of keeping good tenants. Until then the slums hitch a free ride on our coattails.

[Don't believe the Hype]

There are so many looking for rentals that the slums can ask top dollar and there'll be someone desperate enough to pay it.

I kept my rents "reasonable" so if/when the market drops I'll have a better chance of keeping good tenants. Until then the slums hitch a free ride on our coattails.

so you’ve made the investment (by charging lower than current market rent) in a strategy that you think will get you better tenants over the longer term AND you’ve built that strategy based on an assumption that rents are artificially high.

That is your choice and my end up being a great strategy. However you can’t go berating others for their business strategy and choices. The slumlords you refer to are charging what the market will pay. If the market softens they’ll lose their tenants and have to either upgrade their properties or reduce their asking price.

Nothing wrong with what you’re doing, nothing wrong with what they’re doing... just different strategies.

[Nick G]

I have great properties and charge top dollar. If the market moves I may need to charge a bit less. Such is life.