Taranaki Property Investors' Association

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27-08-2007

Rents rising across the country

House prices may be flattening but renting is becoming more expensive. Rents for two and three-bedroom houses are increasing, with the national average weekly rent in July at $420, up 6.3 per cent from $395 in July last year.

For two-bedroom properties the average rent was $318, up from $304 in 2006 (a 4.6 per cent increase).

Auckland has most people renting, with 145,000 households of tenants, almost a third of the national total of 451,500. Auckland-based Barfoot & Thompson rental manager co-ordinator Helen Hodgson said: "Six hundred-dollar-a-week-plus family homes, townhouses, quality places - the middle market - are holding their rents."

Crockers Market Research, which bases its figures on Real Estate Institute and Tenancy Services data, said low-level rents in Auckland had been creeping up since May but the biggest rises were in provincial areas.

Across the country, rents for two-bedroom properties have risen 17 per cent in a year, versus 8 per cent in Auckland. Rents for three-bedroom properties have risen 19 per cent, compared with just 5 per cent in Auckland.

Experts say this upwards trend can be directly attributed to high property prices in New Zealand's most unaffordable city.

Crockers spokeswoman Karen Coleman said Auckland's high property prices (its median house sale price is $445,000, against a national median of $345,000), meant landlords had been hurting for quite some time and would welcome any boost in prices.

Investors with properties in traditional rental areas such as West and South Auckland had fared better than others, she said. Mt Eden might be a popular rental suburb but it had not served landlords as well because capital values had skyrocketed, as had council rates.

Coleman said the provinces had been in catch-up mode. "There are more people moving out of Auckland as people can't afford Auckland prices and I think that's being reflected in the prices around the country," she said.

Mark Power, in the Tauranga branch of property specialist management company Quinovic, said many rentals were on one-year terms, and could increase by 10 per cent when they came up for renewal.

Andrew King, vice-president of the Property Investors' Federation and an Auckland landlord, said although City of Sails' rents were stagnating compared with the rest of the country they would rise for at least the next two years.

Whether the apartment market would fare so well was another matter. King said it had been dragging down rents in Auckland. "A lot of the building of apartments occurred at the same time as the overseas student market was drying up so there was an over-supply," he said. He anticipated this glut would be "soaked up" over the next few years.

Martin Dunn, director of Auckland apartment rental agency City Sales, agreed that apartment rent prices had stayed static "but we've still been pleased by the appetite for the city". He said it might be a year before apartment rents increased.

More people are renting. National home ownership has fallen from 67.8 per cent in 2001 to 66.9 per cent last year, with levels falling faster in Auckland than elsewhere.

Rental prices

* Mangawhai Heads: $300 a week

Near-new three-bedroom home in Mangawhai Heads, 90 minutes' drive north of Auckland.

* Auckland: $350 a week

Three-bedroom family home in New Lynn Heights area    .

* Auckland: $675 a week

Remuera character home, four bedrooms, one bathroom, two toilets.

* Wellington: $500 a week

Newly built townhouse, Brooklyn, three bedrooms, two bathrooms.

* Christchurch: $320 a week

Three-bedroom family home in the suburb of Burnside, new kitchen and bathroom, log burner, double garage.

NZHERALD

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