First National reports rental vacancy rates running at 6% nationally in January, double from a year ago

First National reports rental vacancy rates running at 6% nationally in January, double from a year ago

First National reports rental vacancy rates running at 6% nationally in January, double from a year ago. What are you seeing?

Real estate sales and property management group First National has reported residential vacancy rates nationally are running at around 6% in January, double what they were a year earlier.

First National said 'accidental landlords' who had been unable to sell their properties were a factor driving up supply, while a lack of new migrants in some areas was affecting demand.

Auckland's vacancy rate was low at 0.7% with demand from internal and external migrants.

Meanwhile vacancy rates were at a 20 year high in Wellington because of a lack of high end jobs

Rents fell as much as 10% in Marlborough where the wine industry is in crisis.

“As a generalization, business closures and downsizing in the regional centres has seen people moving to find work but at the same time unable to sell property, leading to their homes being launched privately into the rental market pending that sale," said First National General Manager John Stewart.

"Those vacating rentals are placing yet more property onto the tenancy market," Stewart said.

"At the same time, pressure has come on rentals in those areas where increased or stable employment opportunities exist," he said.

Here is First National's release below.

Residential rental property vacancy rates are double what they were last year as house sales continue to dawdle, according to the First National Group.

First National Group’s quarterly survey of its property managers from Northland to Southland shows an overall vacancy rate of over 6%, twice the 3% of January 2010.

First National Group general manager John Stewart said it was unusual to see a national vacancy rate this high in January.  

“This level of vacancy is more normal for winter than summer.  However it reflects the current low sales volumes and restricted migration levels New Zealand is currently experiencing.  Volumes of unsold houses becoming rental oversupply is no surprise.

“As a generalization, business closures and downsizing in the regional centres has seen people moving to find work but at the same time unable to sell property, leading to their homes being launched privately into the rental market pending that sale.   Those vacating rentals are placing yet more property onto the tenancy market.

“At the same time, pressure has come on rentals in those areas where increased or stable employment opportunities exist,” Stewart said.

Regionally, the survey shows a strong Auckland where demand for all types of properties continues to push the vacancy rate to just 0.7%.  

“Rents in that city have crept up between 3% and 10% as ex-pats returning home and immigrants from the United Kingdom and Asia are fuelling demand.”

The Nelson Tasman region and the Bay of Plenty were also experiencing strong demand consistent for the time of year and anticipated economic activity in their regions.

“In the late 1980s and again later in the 1990s similar drifts to those two regions occurred, often based on climate, lifestyle and aspiration rather than real work opportunities. Such movement certainly puts pressure on rentals, existing property for sale and building starts,” Stewart said.

At the other end of the spectrum, Wellington in particular had unusually high vacancy rates.

“Wellington property managers are now reporting the highest vacancy rates in 20 years.  It’s right across the market but especially in upper end properties and apartments.  Contract work being lost to Auckland is one of the main explanations I am hearing for the decrease in executive accommodation required.

“It seems fewer new senior roles of the type and scope that attract population inflow to the capital, are being advertised presently.”

However at this stage landlords appeared to be waiting it out as rents remained stable, he noted.

The rest of the country had more supply than demand but rents were mostly stable.  

Rents dropped in some types of property in just 14% of locations, but were stable or rising in the remaining 86% of locations.

Marlborough continues to have high vacancy rates due to the ongoing challenges in the viticulture industry and rents had dropped an average 5 - 10%.

“Marlborough has had a tough time but due to attractive land prices, there are now some good opportunities for landlords prepared to build with the long term in mind,” Stewart said.  

Across New Zealand, demand for high-end properties increased with shortages of such reported in 67% of locations.

“Landlords would do well to consider raising the standard of their rental property holdings given the higher expectations from potential tenants.”

Stewart noted a lift in the house sales market could rapidly reverse rental trends.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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34 Comments

Here in Nelson Commercial property after property is becoming empty. Partly due to the monopoly 3 property families have on all property here and their greedy leases and partly due to many businesses going under, again partly due to the first reason

Stretched owners will need to let quick or put the property on the market.

Where is Olly?

Pity Auckland isn't following.....yet.

Very interesting.

Supports my view that we'll see property prices drop away quite a bit (3-4%) in 2011 outside of Auckland (which I think will hover somewhere between -2% and 2%) 

With such vacancies, landlords outside of Auckland will be limited in their ability to raise rents. Prices on investment properties will have to come down to balance out the lack of ability to use higher rents to improve yield

Don't forget that a large part of the vacancy factor is caused through students who leave their rental accommodation in December and then scramble back in February.

Just watch how the market wil tighten up over the next couple of months.

Surprised that First National didn't factor that in before rushing to print.

that's true, but is largely negated by the fact that they are comparing year on year ie. the same student factor was at play the same time last year - but the vacancies this year are double. Its the comparative difference at the same time of the year which is significant

Now if the number of students had soared then that could be a factor - but  I don't think that has happened

That's why, as I posted then, my complex manager laughed in December when I asked if my rent would be amended in January. He's got a swag of rentals that the Asian student invasion did not re-sign for in December, and he still is looking for replacement tenants. Something about tthe Government changing the student study pre-requisits as at 1.1.11. No brand new Nissan GTR's, Lambo's or RangeRovers in the car park this year!

This, perhaps ?

Changes to Residency Requirements for Student Loans

"From 1 January 2011 permanent residents and Australians will be subject to a two year stand down before they can receive a Student Loan. This means they will need to have lived in New Zealand for at least two years and be ordinarily resident in New Zealand in order to get a Student Loan. Permanent residents also need to have held permanent residence for at least two years to qualify......"

http://www.studylink.govt.nz/about-studylink/media-releases/2010/changes-to-student-loans-and-allowances-detail-budget-2010.html#ChangestoResidencyCriteriaforStudentAllowances3

Have a son who is in process of getting a house to rent in Mt Maunganui- he has found a significant number of people chasing properties, esp good ones. Huge development going on in Tauranga area, Waikato University and local Polytechnic about to select a site in CBD area for a new joint education campus to host 6,000 students, building to be completed for 2014. Then guess what's that going to do for rentals in a few years time?

Regionally, the survey shows a strong Auckland where demand for all types of properties continues to push the vacancy rate to just 0.7%.   

Enough said....... :)

exactly. I've never argued that Auckland will fall away much at all (not that I think its going to boom anytime soon either)

As for greater NZ, thats a different story

 I've never argued that Auckland will fall away much at all (not that I think its going to boom anytime soon either)

Hi Matt, happy new year. Are you referring to the Auckland rental market, when you say not booming?A 0.7% vacancy is pretty damn good :)

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10701413

I agree about the rest of NZ being a different story. Ex-agent (who has mates all around provincial NZ :) has been telling us this for the past few months

Regards

 

The drift north must still be in full effect, perhaps it has even escalated in recent years as people search for work.

Add to the competition from all other uni's for the student (government) dollars lowering rents across the board. Yup obviously for the tga there will be increased rental demand but it's coming from a limited and reducing source.

Govt money is stretched. They've been dishing out student loan money at ever increasing amounts now they are pulling back by restricting who can access it. This is going to hit all uni based towns and yet another example of a spinoff from the gfc.

Many young people have had to leave Tga to go to university, so the new campus to be built there will result in retaining more plus attracting others from out-of-town. Tga student numbers will grow at expense of others.

Yes Marlborough is in trouble...we had the boom now we have the bust...but hey at least we have a high rise parking building...it was free wasn't it!

Some properties remain unsold after years on the market. Sections litter the area like grave plots. Those who can are leaving for aus or anywhere there is work.

Farms that have sold go for way below the bubble mad valuations. Nobody wants a vineyard. 

Wolly, having visited Blenheim a few times to stay with friends (nice spot by the way), I really can't understand the need for a parking building! Sounds like a white elephant 

You were on the outskirts of town if you were more than about a 10 minute bike ride  into the centre!

You do all realise that the student population has gone down by 7-15% due to a popualtion bulge that has now reached the universities

"These are choices made of financial necessity." Rents are going to ease, everywhere.

http://nz.news.yahoo.com/a/-/top-stories/8712698/cantabrians-move-back-to-quake-damaged-homes/

 

A pity landlords like you are the minority. The landlords I've had are always full of broken promises "Oh, that will be fixed before you move in." Yeah right.

Well Square, mine brings me fresh farm eggs and takes me on 4wd trips overland...all for less than $100 a week for a 3br house...plus the occasional wild pig left on the gate and always a super xmas present...beat that!

I wish I could beat that, Wolly. Being treated like a second-class citizen makes me want to get into debt to buy a house!

Don't be daft sqaure...what you gotta do is think.....are you and the family better off working 24/7 to be able to exist in a dive like Auckland...or would renting for heaps less in a small south island town where there was the odd bit of work and lower incomes but the promise of wild game to be had out the back window. It's a tough decision mate.

When I first moved to the deep south some 4-5 years ago you couldn't rent a place during peak season (winter and summer). Now days almost all year round there are houses advertised in all the papers, sometimes the agents will even forgo their letting fee just to get rid of a place.  The rental market here is nowhere near what it once was.

http://smh.domain.com.au/home-renting-tips/blogs/talking-property/no-end-in-sight-for-renters/20110125-1a3ee.html

 

Sydney vacancy rate 2.2%

Auckland vacancy rate 0.7%

Higher imbalance of demand exists in Auckland - good times for Auckland landlords.

 

Two weeks ago our tenant gave his notice in and we thought we would struggle to find a new tenant,  however within a week we had a choice of three and managed to get an extra $10/week.  Last Friday I checked the local paper and for the first time in ages there were adverts asking for 3/4 bed rentals. Kerikeri has been badly hit but maybe things are turning.

A  friend is a quantity surveyer here and he is swamped with work so that may be another early indication that things are starting to improve.  This could have happened earlier if that idiot Bollard had not increased interest rates last year.  At the time I posted on this site that it would be the last straw for the Far North and that is what it was.

Yeah we believe you Keriwin....!

You got Tuis too?

If they're  in your flax bushes, you're in luck.

Compress the flbre into a cube.

Then you've got a block of flax and you can rent 'em out.

 

Well sorry Wolly if I upset you but I am only saying what is happening in Kerikeri,  remember we have been hammered and can't go any lower.  I have two sections but can't sell them as the costs of taxes (local & national) plus surveyors fees been that there is no money in it and the land was free to me!!!

Arh.... but you didn't say you had hit bottom did you...property everywhere is set to collapse now...no amount of bank bait and cheap RB credit can stop the fall...it will be made worse by the aussie collapse and the rising rates which are a certainty and have stuff all to do with growth.

What does tui have to do with anything?

Rental market in Auckland is tighter than Sydney.

So this headline and article are complete rubbish.

Bad journalism.

Where is the professional pride?

The headline clearly states that "rental vacancy rates are running at 6% nationally.." and the article goes on to say that Auckland vacancy rates are indeed low. I'm not sure how that qualifies as "complete rubbish".

It's rubbish because wholesale regurgitation of reports from other sources is not of any value - and neither is the constant negative bias.

Do you think the 'journalism' on this site is of a good quality?

Is it unbiased?

Does it shed new light or different angles on the issues?

I do find it useful to have all the information in one place.

The negative bias can get a little tiresome, but most people don't like bad news!

However, I don't visit this site to read the articles - I visit this site to read the articles in conjunction with the comments, and that's where I find the new light and different angles.

Sydney vacancy rate 2.2%

Auckland vacancy rate 0.7%

http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=1070...

"But the places we were looking at would not have gone up in value. It wasn't what we wanted."

Oh dear.

Cheerio,

Miss Astrid