Rents rise around the country as cost crunch goes on landlords

Monday, 16 April 2018

Rents in one part of Wellington were up more than 17 per cent, year-on-year.

Extra costs for landlords are being blamed for rent rises around the country.

The NZ Property Investors' Federation has released its latest statistics, drawn from government tenancy bond data, which compare the three months ended March to the same period the year before.

Across the country, rental prices were up 6.1 per cent to $433 per week. That's about twice the annual increase recorded in March 2017 and March 2016.

'There have been so many cost and regulatory increases over the last few years that it isn't a surprise that rental prices are increasing as they are,' federation executive officer Andrew King said.

*** [South Auckland mother-of-three shares her housing struggles

](https://www.stuff.co.nz/business/property/101774285/south-auckland-motherofthree-sanjida-pathan-shares-her-familys-housing-journey)* Here's why rents are rising

* Will targeting landlords solve our rental problem?**

'Unfortunately the situation looks likely to continue.'

Gareth Kiernan, of forecasting firm Infometrics, agreed.

'Gradual rises in interest rates will maintain upward pressure on rents during 2018 and 2019, and landlords are also likely to try and recoup increased costs associated with tougher standards for rental properties, including improved insulation requirements,' he said.

'The extension of the bright-line test for capital gains from two to five years will limit the willingness of new investors to enter the market, thereby leading to further increases in rents.'

Andrew King of the NZ Property Investors Federation says the trend will continue.

But economist Shaumbeel Eaqub said how much demand there was for rental properties, the number of properties available for rent, and how much people could pay, were much more important factors than landlord costs.

'It's not as if landlords have that pricing power, it's a very fragmented market. It's more around what people are able to pay and the demand for that particular location.

'In Wellington rent went up a lot not because landlords' costs went up but because of the squeeze caused by the earthquakes, and an increase in student numbers.'

He said, if there was no demand for rental properties and lots of excess supply, it would not matter how much landlords' costs had risen. 'Rents still wouldn't rise.'

The largest year on year increase was in Hutt Valley, where rent rose 17.1 per cent to $413 a week.

King said that area could be quite volatile due to low numbers of new rentals.

Porirua was next with an 11.6 per cent increase to $407 a week.

Nelson had the third-highest rental price rises at 9.2 per cent to $382.

Auckland rental increases ranged from 4.2 per cent in Waitakere to 5.2 per cent on the North Shore.

In Christchurch, rental price falls over the last few years appear to have bottomed out. While the 3.8 per cent increase in Christchurch rental prices to $386 was lower than the national average, it was the first time that rental prices have shown an increase since 2014.