Westpac economists are forecasting rent inflation will remain elevated "for years" due to property tax changes in last year's budget, destruction caused by the Christchurch earthquakes, and increasing immigration into Auckland.
Their comments (see below) come after Statistics New Zealand released CPI figures showing rent inflation of 0.6% in the March quarter was the fastest quarterly rise since the September 2008 quarter.
See their comments on rent inflation below. Your view?
One notable exception to the lack of pricing power was in rents, which rose by 0.6%, the fastest quarterly pace since September 2008. We have long been anticipating stronger rents, as last year’s tax shakeup made property ownership less attractive, especially for landlords.
This has simultaneously put downward pressure on house prices and upward pressure on rents. In addition, earthquake destruction in Christchurch and stronger immigration in Auckland may have squeezed the rental markets in the two largest cities. We expect rent inflation to remain elevated for years.