The rental market in Wellington is in a strange and different place. There’s not much available for tenants to choose from, and the traditional January Madness has been replaced with a steady rumble of activity.
If we are to believe the media (and frankly, who wouldn’t…?), available rental listings are down by 75%. Now that seems rather pessimistic but it does make for a good headline. Remember, statistics are just numbers looking for an arguement.
Trade Me Statistics
Looking at Trade Me as one of the main advertising channels, there are less than 10,000 properties available nationwide. In fact there are less than 100 properties available for rent in Wellington central city. Here are some rental property numbers to consider:
Kapiti Coast – 54
Porirua City – 129
Lower Hutt – 53
Upper Hutt – 33
Wellington – 831
This tight supply means that rents are going up and there’s a perfect storm making that happen at the moment:
1. Available rental properties are being snapped up extremely quickly
2. Tenants are not moving as frequently and tending to stay longer in their current tenancies
3. Changes in the way that landlords advertise their properties – Trade Me pricing has risen, so Facebook and Neighbourly are being used more, along with realestate.co.nz by the agencies
4. Property sale prices are high so many owners are cashing up
5. Many investors are selling at the moment, and the Baby Boomers seem to be getting the blame for driving this
6. The Reserve Bank’s LVR changes stopped a lot of would-be investors in their tracks – me included!
7. Banks are not as keen as they were a few years ago to lend on rental properties
8. Supply is simply not meeting demand – the cost of construction has doubled in the past 10 years because of regulatory changes, so not enough properties are being built
9. Compliance costs and local Council consents processes are too expensive, also slowing the building market and reducing supply
10. The Government (in its infinite wisdom) has sold off or demolished some of their residential properties, and they’re not replacing them with new builds
11. Labour’s proposed plans for rental property rules will push rents higher (read more here)
If you are a landlord, you could be considered to be in a strong position right now. If you’re a tenant looking for a place to rent, be warned – it’s a tough market in Wellington, and be prepared to pay more than you originally thought.
managemyproperty is an independent Property Management company based in Wellington, NZ
Richard Horne remains a tireless and energetic investor and commentator, running an experienced eye over the property market and trying his best to explain the eternal vagaries of it all!