Auckland rents have calmed because of cautious landlords

Thursday, 19 October 2017

Andrew King landlord and executive officer of the NZ Property Investors Federation says rents are rising faster than general inflation.

Auckland's rental market has cooled because of landlords becoming more cautious, an expert says.

Infometrics chief forecaster Gareth Kiernan said landlords hadn't increased rental rates due to falling optimism in the housing market.

As Kaikoura continues its rebuild the town's rental prices are expected to remain volatile until mid next year.

Auckland's rental inflation rate had slowed to 3.3 per cent a new report on residential renting has found.

Nationally the renting inflation rate sat at a steady 4.6 per cent year-on-year in the September quarter because of a ripple effect felt from Auckland's subdued inflation.

Nationally, rental inflation was steady over the September quarter.

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After the destructive earthquake 7.8 magnitude earthquake nearly a year ago, Kāikoura's house rental market is feeling the pressure.

The town's rent increases hit a 20-year high in July of 44 per cent, but eased back over the last two of months.

Kiernan said Kāikoura's rental market was volatile and would bounce around a bit before settling down.

But this wouldn't be for long as the road and rail rebuild had been tracking well.

'By mid next year the market should stabilise, then by the end of 2019 we-could expect to see a reversal in inflation,' Kiernan said.

In Christchurch the opposite has happened with rents in the city having dropped about 6 per cent in the past year.

NZ Property Investors Federation executive officer Andrew King said Kiwis said rental inflation nationwide was still running higher than the overall inflation rate of 1.9 per cent . Rents were rising faster than they had historically, he said.

King said, before 2010, landlords increased rent in line with the inflation rate. Since then, rent prices have been increasing faster, which has put great pressure on tenants.

He said stricter regulations had made it challenging for landlords.

But King said overcrowding in rental properties with tenants moving in together had limited how much landlords could increase their rents.

Despite house price inflation having slowed in Auckland, the lack of rental growth meant rental yields had fallen to a new record low.

The Infometrics rental report showed this trend had been mirrored around the country and would be amplified over the next two years because of a lack of expected capital gains in the housing market.