Landlords feel pinch as rents fall 10%
‘‘SURVIVAL rates’’ on rental homes in Queenstown, emptied of tourists by the pandemic, mean new rental contracts in the South Island have settled almost 10% lower than a year ago.
Throughout the South Island, excluding Canterbury, new rental prices dropped 2.5% in June, adding to a dramatic 8.6% drop in May — the biggest monthly fall in any region since Stats NZ started collecting the data in 2006.
The move has been driven by falling prices in tourism hot spot the QueenstownLakes district as the border closure has throttled back the region’s economy.
Stats NZ’s rental price index now records new tenancies in the region being an average of 9.5% cheaper than in June last year, even while new rental prices nationwide have increased 0.3%.
One Queenstown property manager who asked not to be named said current rental prices were ‘‘not market rates, but survival rates’’, as owners tried to set affordable prices while still being able to meet mortgage repayments.
Property prices had felt invincible before Covid19 but the pandemic revealed they were not, she said.
Kelvin Davidson, a property economist at CoreLogic, said the falling rental prices reflected a shock to both supply and demand.
The lack of international tourism emptied out the town, he said, while homeowners who had once leased properties as shortterm holiday homes — such as Airbnb — were now listing on the regular market.
‘‘Most probably, the supply of property available to rent has gone up, so you’ve got a supply and demand factor going on,’’ he said.
The size of the fall surprised Mr Davidson, given rents tended to be relatively steady.
‘‘To see such big changes in rents is, in some ways, surprising,’’ he said.
‘‘But you take a step back and see a big chunk of our economy is gone and, in that way, it is not surprising.’’
A fifth of Queenstown’s economy was derived from tourismrelated businesses, he said.
Betterthanexpected spending and domestic tourism was helping soften the blow from the pandemic, but prices might fall further as the last of the wage subsidy ended with no immediate plan to restart international tourism, he said.
‘‘It’s not an endless decline, but for the rest of the year the pressure on rental markets is definitely going to be on the down side, that’s for sure.’’
New rentals in regional North Island, excluding the two main centres, had the biggest price hike, up 6% from June last year.
Wellington prices fell 6.5% between March and April but gained 1.6% in June to be 1.4% above the year before.
New Zealand’s total stock of rentals, new and existing contracts, rose 0.1% in June and were up 3.4% from the year before. — BusinessDesk
❛ . . . you’ve got a supply and demand
factor going on