Porirua rents skyrocket
Extra costs for landlords are being blamed for rent rises around the country - with Porirua suffering one of the biggest jumps.
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.
The largest year on year increase was in Hutt Valley, where rent rose 17.1 per cent to $413 a week.
Federation executive officer Andrew 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.
‘‘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,’’ King said.
‘‘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 brightline 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.’’
But economist Shaumbeel Eaqub said how much demand there was for rental properties, the number of properties avail- able 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.’’