New data from Trade Me suggests more tenants are staying put in rentals as hot house prices and stricter lending criteria make it harder to purchase their first home.
Trade Me has released its latest update on the asking prices listed on its site.
Head of Trade Me Property Nigel Jeffries said the data showed that more tenants were opting to renew their tenancy agreements rather than move out and into their own homes.
“We’ve seen a 15 per cent reduction in rental listings across the country in the last year which we’re putting down to many Kiwis staying put in their rental,” he said.
“It’s taking longer to get a deposit together so many Kiwis are hanging on to their rental longer and staying there rather than try their luck in a tough rental market.”
Median weekly rents in the Wellington region continued their upward trend in July, up 7.1% on last year to $450. Tenants can now expect to pay an extra $1560 a year to rent the typical property in Wellington.
“Wellington is a perfect example of where we’re seeing renters stay put and save their money rather than move into first homes. We’ve seen a reduction in the number of Wellington rental properties on the site for the last six months which indicates the loan-to-value restrictions are biting.”
It is now harder for investors to get loans to buy property – they require a 40 per cent deposit. Banks must also limit their lending to owner-occupiers with small deposits.
Infometrics forecaster Mieke Welvaert said there had been a lot of low-grade office space earmarked to become apartments.
“But, thanks to the earthquakes, demand for earthquake-safe office space has meant that these conversions were put on hold and we didn’t have that additional rental supply come on board.”
The statistics revealed that Christchurch’s median weekly rent had increased compared to the year before for the first time since March 2015.
Following the earthquakes there was a huge spike in rental costs, which got as high as $495 in March 2015. Median weekly rents are now $100 less at $395, but they’re $5 up on June’s low,” he said.
“While this increase is small, it’s a signal that Christchurch’s rental market has found its happy place. It’s been helped by an increase in available rental properties in Christchurch as the rebuild slows, there are currently 250 more properties available now than July 2012.
“This means that supply is better meeting demand which is helping to stabilise prices. We don’t expect to see any significant drops in the median weekly rent in the foreseeable future, it appears Christchurch has finally found its rental rhythm, giving both tenants and landlords plenty to smile about.”
Auckland’s rental market was also stable. The median weekly asking rent has remained at $530 for the past four months.
Nationwide, median weekly rents were stagnant, up 2.3 per cent over the past year, to $450 a week.
But some regions have experienced large increases. Northland’s average rent jumped 14 per cent from July 2016, to $399 a week. Gisborne and Marlborough landlords are also charging a lot more – up 16.7 per cent, year-on-year.
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