Real estate boom puts heat on Hutt renters

Hutt Valley renters could be facing increases as property investors prepare or the next step in the region’s property boom: rising rents.

Real Estate Institute figures revealed the median Upper Hutt sale price rose 20.4 per cent year in the year to the end of June compared to an 11 per cent increase nationwide and 21 per cent in Lower Hutt.

Median prices for the wider Wellington Region rose 16.7 per cent.

Hutt City Professionals managing director John Ross said investors were taking advantage of the high prices to sell down their poorer performing properties and trade into better quality rentals.

‘‘They are preparing for the next step in the property cycle – increasing rents. Good tenants want good property and they are prepared to pay for it.

‘‘Rents are very seasonal. They have gone up 5 per cent in the last six months but most of that growth was at the beginning of the year. Winter is always a bit soft. Owners are wanting more due to the cost of compliance changes but they may have to be patient until spring.’’

However, Ray White Lower Hutt managing director Rupert Kemeys said it was more likely that investors were using their growing equity to invest in more properties rather than fancier ones.

‘‘The proof is in the pudding with listing numbers at an all time low.

‘‘Investors are in fact buying a lot worse quality of rental on fundamentals, even paying 4.9 per cent gross, down from around 8 to 9 per cent gross return a couple of years ago, ... due to the attractiveness of capital gains taking full effect on the market.

‘‘We are just at the beginning of a property cycle where capital gains should not only be expected but also will drive the market and buyers offers, unless either the Government or Reserve bank put measures in place to slow the furious pace of this market.’’

Harcourts Wellington managing director Marty Scott said the past eight months had seen solid price rises for much of the region. Investors from Auckland were looking to property in the Capital as a way of making the most of their equity gains.

‘‘They’re thinking maybe they can get their five or six per cent yield that they can no longer get in Auckland.’’

This house in Maoribank was bought for $357,500 in 2014. It sold without alterations for $425,000 earlier this month.