Rents fall $60 below Chch peak

Christchurch rents are now back where they were nearly five years ago.

On average, tenants are paying nearly $60 a week less than when rents peaked after the Canterbury earthquakes.

The median rent of properties let out during May was $363, down from an early 2015 peak of $431, bond figures show.

Brent Manderson, of Harcourts Accommodation Centre, said tenants were being more choosy about location. They wanted homes near schools zones, bus routes, pools and shops ‘‘because they can’’, he said.

‘‘We’re starting to see an expectation of quality, because of the way the market is.’’

Some landlords had struggled to adjust to lower rents as the city’s housing supply increased, but most had ‘‘been brought back into line’’, Manderson said.

Canterbury Property Investors’ Association president Stephen East said the city’s rental market was the softest it had been for almost a decade.

‘‘Christchurch is one of the few centres where rents are going down instead of up. Landlords are having to drop rents by a reasonable amount to attract tenants, and perhaps offer a free week to get a tenant in.

‘‘There’s an oversupply of properties so demand is low, the supply is high.’’

East himself listed a threebedroom house with a garden for rent in Bishopdale two days ago ‘‘and I haven’t had one ring for it yet’’.

He did not expect the trend to change soon. ‘‘You’ve only got to see the new houses still being pumped out by housing companies in the north and west of the town, and it’s having a flow-on effect on the rental market.’’

He advised landlords to be realistic about rents and present homes to a high standard.

‘‘You have to make sure your property is in good condition. All the new housing has raised the standard.’’

Rent Right owner David Hopkins said there were about 1500 homes available to rent in Christchurch. Tenants were educated and wanted good homes with smoke alarms and insulation, he said. ‘‘We are seeing tenants looking for longer terms now – sometimes 18 months or a year. There’s a cost to moving and if they find the right property, they want to make the best of it.’’

Even with fewer tenants to go around, most landlords would still not take unsuitable tenants, Hopkins said.

QV’s figures also show landlords in some suburbs are making as little as 3 per cent a year, before tax, on investments.

Capital gains would boost these returns, although property values have not risen for over a year.

QV valuer Daryl Taggart said the lack of capital gains could influence landlords’ plans.

‘‘Couple this with a continuing reduction in rental returns over the last 18 months and investors will be looking at their bottom line,’’ he said.