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Rental Demand Rises, Rents Stabilize

Contributor:
Fuseworks Media
Fuseworks Media
Rental Demand Rises, Rents Stabilize

Rental demand has increased over the past three months with both vacancy rates and rent drops decreasing. First National Group's quarterly property management survey of its network offices across New Zealand shows vacancy rates have decreased from an average of 6.3% to 4.9% in the past three months.

Increasing demand is putting pressure on stocks of 3brm properties and the majority of areas surveyed showed rents either stable or rising. First National manages around 6500 rental properties on behalf of landlords nationwide from Invercargill to Kaitaia.

Sixty-nine percent of offices reported an increase in occupancy rates for the three months to October 16, 7% no change and 24% a decrease. The most dramatic changes were in Waiheke Island and Ashburton, which in July had unusually high vacancy rates of 21 and 18%.

Both have dropped to around 1.3% and 4% respectively. First National Group General Manager John Stewart said many people looking to buy on Waiheke Island were now renting longer, some being apprehensive about taking out loans and job stability.

Additionally, some landlords had retrenched, down-sold properties and moved into houses they previously rented out, resulting in displaced tenants seeking new homes. In Ashburton rent reductions of up to 10% and spring weather had helped refill vacant properties, many of which had been older, colder homes.

Across the nation rentwise, 58% of offices reported rents being static but 32% reported rent increases in at least one sector of the market, varying in amount between 1% to 20%. The most notable average increase was in Taranaki where rents for properties around Stratford have gone up an average of 15% in the past 3 months.

Only 10% of offices reported rent reductions and these ranged from 1% - 10%. Stewart said overall, the property rental market seemed to be settling, perhaps as a result of increased sales volume removing 'temporary' rentals.

However, business closures, for example Bridgestone Tyres in Christchurch, would continue to affect house sales, causing unemployed people on one hand to sell or need to move to seek a new job and creating rental vacancies as tenants move on.

"Predictions proffered by the banking sector and economists are that unemployment will continue to grow through at least until the middle of next year, so this situation will need to be carefully watched by landlords and property management specialists"

"On the positive side, provincial centres and rural towns are already seeing the effects of improved income prospects right across the rural sector with incoming farm staff seeking rental properties," Stewart added.

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