Auckland Property, Auckland rental crisis, housing shortage, Investment properties, landlords rental demand

7 February 2011

Demand for rental property in Auckland is at crisis point, with some houses now attracting as many as 200 would-be tenants.

Desperate tenants are often having to spend months searching for a place to live, and some even engage in bidding wars. Landlords are sitting pretty.

Rental agents say they are receiving hundreds of inquiries for listings, especially for stand-alone houses close to Auckland’s central business district.

An agent who listed a four-bedroom property in Balmoral said he received 200 inquiries on the property before letting it out last weekend.

A property in Ethel St, Kingsland, attracted more than 200 would-be renters during a half-hour open-home.

“It’s going to be very easy to rent it. Narrowing down the list of tenants is going to be the hard part, to be honest,” landlord Dave Smith told TV3.

Rental agent Darryl Goode said in the current market, it was not uncommon for hundreds of people to register their interest in a property.

“Give me another 10 or 20 three-bedroom houses and I could let them all out in a couple of days.”

Mr Goode said there was a “severe shortage” of stand-alone houses to let in the city-fringe areas, and the market was the tightest he had seen in his 12 years in the industry.

One Auckland real estate agency recently reported that the average weekly rent for a three-bedroom home in central Auckland was $580 in December, up 16 per cent in a year. For Takapuna/Milford it was $670 (up 26 per cent) and Remuera $690 (up 25).

The Herald on Sunday has reported that Auckland rental property listings on Trade Me in January were down 24 per cent on the same month last year.

Demand was also outstripping supply in Northland, Bay of Plenty and Canterbury, although nowhere near as badly as in Auckland.

Agents say the economic slowdown is the main contributor to the rental market being at crisis point.

More rental properties are being sold by investor landlords who want to cash up, and hard times are forcing homeowners to also sell and become renters themselves.

Landlord Lourdes Sudianto said he had to sell his two central Auckland rental properties after his trading business was hit by the global recession.

The slowdown has also forced many landlords to return from overseas to re-occupy their properties.

Rental manager Lesley Whiting said her Browns Bay office recently lost to returning landlords about 10 of the 300 properties it was managing, and was currently listing only two rental dwellings.

“It’s got nothing to do with landlords wanting to capitalise from the World Cup, but the economic crisis which is forcing more people to come home and stay home,” Ms Whiting said. “Who knows how long this is going to last, but it’s really reaching crisis point for people looking to rent today.”

Last year, net migration of 16,500 was the highest since 2003, driven mainly by fewer Kiwis heading to Australia to work.

“The economic recession has had a significant impact on the number of New Zealanders leaving for Australia, with a 27 per cent decrease in trans-Tasman departures over the last 12 months,” Immigration New Zealand said in its latest migration trends and outlook report.

A lack of new houses being built also meant supply was not keeping up with demand fuelled by population growth.

“It’s usually a seasonal thing, but the big drop in supply of rental homes in Auckland this year is somewhat unprecedented,” Mr King said.

“The situation is more pronounced in Auckland, felt more at this time of the year because it’s when people relocate, decide to move houses, and international students start coming back,” he said.

Mr King said the situation could change if rising rents resulted in better yields for landlords, and more people started investing in rental properties.

“It will help to meet the demand, but I do not see rents going anywhere but up.”

What’s causing the crisis?

• More investment homes are being sold by owners wanting to cash up.
• Hard times are forcing homeowners to sell and join the rental market.
• More overseas-based landlords are returning home.
• Fewer houses being built.

Source: NZHerald

Auckland Property, Auckland rental crisis, housing shortage, Investment properties, landlords rental demand

Auckland Property, housing shortage, New Zealand Property residential construction

25 June 2010

 Source: NZ Herald

About 10,000 new homes need to be built in New Zealand to keep pace with population growth and ease the current housing squeeze, a report released by Westpac shows.

The report says the number of houses built halved in the two years to 2009, while population grew 0.4 per cent as fewer Kiwis crossed the Tasman.

The resulting squeeze on housing - only the third since reliable data began in the 1960s - had boosted the average number of people per house in New Zealand from 2.52 to 2.55 during 2009.

A rapid growth in construction activity was needed to ease the squeeze, the report says.

“By our calculations the current rate of house building will be enough to keep the number of people per house constant through 2010, but will not be enough to bring it down,” the report says.

Westpac is picking a 23 per cent growth in residential construction for 2011, and even that would only just be enough to keep up with population growth.

Even more would be required during 2012 to make inroads into the shortage.

“Those forecasting lesser increases would have a job to explain exactly where people were going to live,” the report says.

Earlier this year the Salvation Army said the slowdown in the building sector had left Auckland short of at least 6000 homes, with the greatest pressure going on South Auckland households.

Population growth in Auckland had far outstripped residential construction, which had plunged to a 20-year low, forcing more than 20,000 Aucklanders to live in overcrowded conditions, the organisation’s 2010 State of the Nation report, A Road to Recovery said.

Westpac said one way to consider the current situation was to compare the number of people per house to its estimated trend.

“That suggests that New Zealand has a housing shortage of about 10,000 houses,” the report says.

Historically every time New Zealand has gotten into a housing shortage situation, the residential building industry had responded by ramping up production to restore balance, the report says.

“We expect this time will be no exception.”

Fears that difficulty obtaining finance will prevent a pick-up in residential construction, like it had following previous recessions, ignored the lessons of history and economics.

“Market economies tend to find ways of getting around obstacles, normally by throwing up new price signals.

“In this case developers who relied on cheap finance have been forced to sell land, pushing the price of undeveloped residential sections down by 15 per cent since 2008,” the report says.

Over the same period house prices have remained unchanged, therefore the margin on offer for successful property development was now much wider than it was during the boom.

“There is a juicy profit opportunity on offer for larger firms that are less reliant on finance to get involved in residential property development which is precisely what we think will happen,” the report says.

Auckland Property, housing shortage, New Zealand Property residential construction