Renters wanting first home drive up prices
People stuck in between flatting and home ownership are putting pressure on the rental market, Barfoot & Thompson says.
The Auckland real estate agency said the average rent for properties on its books increased 4.7 per cent in the third quarter of this year, compared to the same time the year before.
The average weekly rent being charged is now $541.
Barfoot & Thompson director Kiri Barfoot said increasing costs for landlords and the increased risk of owning a rental property were major contributors to rent increases.
‘‘Across Auckland, rent has increased by a little under 5 per cent in the last year. We are just coming out of winter, which is a maintenance-heavy period for rental properties – add to that uncertainty around rates increases, increased insurance costs due to the fire service levy and the incoming Earthquake Commission levy, compliance costs for smoke alarms and insulation, and you can understand the context of rent increases.
‘‘Many owners will be relieved at recent forecasts indicating that interest rates are likely to remain flat in the near future.’’
Average weekly rent in the central suburbs increased the most of any area, rising by 6.2 per cent from $550 last year. Other areas with higher-than-average weekly rent increases included the eastern suburbs, which rose by 5.5 per cent, to $628.
‘‘Demand for rentals in Ponsonby, Grey Lynn, Mount Eden, all the old Auckland City suburbs west of the Southern Motorway, is strong.
‘‘The area boasts short commutes into the city, and the properties often have outdoor space, parking, and are close to shopping, dining and entertainment areas.
‘‘At the same time, fewer new properties are being built because of high land costs when compared with other areas where denser residential developments can be constructed, or where land costs are lower,’’ Barfoot said.
She said tenants should not expect to see the kind of flattening in the market that buyers had experienced.
’’I wouldn’t expect rent to flatten out as house prices in Auckland have. Just as Auckland rents didn’t increase at double-digit rates along with house prices last year, or the year before.’’
The largest rent increases in terms of property size were for one-bedroom homes, which averaged $359 per week, rising 6 per cent, year on year.
‘‘Almost 60 per cent of renters plan to buy a home in the next two-to-five years, but we know that saving for a 20 per cent deposit and tough lending restrictions are delaying people from buying,’’ Barfoot said.
‘‘In the meantime, people are taking an interim step – choosing to rent on their own in between flatting and the traditional first-home buying stage. They are prepared to pay a little bit more for privacy, and are fortunate to have plenty of new developments to choose from.
‘‘In Auckland Central, where a large number of apartments have become available in the past couple of years, rent for one-bedroom properties has increased at the same rate as the citywide average, showing that the demand is there.’’
"People are taking an interim step – choosing to rent on their own in between flatting and the traditional first-home buying stage."
Kiri Barfoot
Barfoot & Thompson director