Christchurch has lowest level of rental inventory in 'years'; Average asking rents up 15% from year ago, Trade Me says; 'More people now looking to buy'

Yet more evidence of Christchurch's rental squeeze has emerged, with Trade Me Property saying the current level of rental inventory in the city is the lowest in years, while average asking rents were up 15% in the first quarter of 2012 compared with the same time a year ago.

That compared to a nationwide rise in average asking rents of 4%, which was also driven by a 7% annual increase in Auckland.

Pressures in the rental housing market meant prospective tenants were now increasingly looking to buy, Trade Me head of property Brendon Skipper said. Demand from potential buyers rose 13% over the year, while the nationwide level of inventory for sale was flat.

Christchurch squeeze

Tenants hunting for rental property in Christchurch would be finding it tough going at present, with supply down 40 per cent compared to a year ago, Trade Me said in its latest quarterly rental market report for the first quarter of 2012.

Supply had started to contract as far back as September 2010 and had never recovered, Skipper said.

“When the first major earthquake struck, we saw supply begin to come under pressure, and the February 2011 earthquake exacerbated the shortage. Supply has continued to plummet, and the current level of rental inventory for the city is the lowest we have seen for years,” he said.

As expected, demand was extremely high in Christchurch too, with landlords fielding a massive 42 per cent increase in the number of enquiries from potential tenants.

“It is a classic case of supply and demand, and is now flowing through to rent,” Mr Skipper said. “We’ve seen the average asking rent go up 15 per cent in Christchurch, well ahead of the national increase of 4 per cent,” Skipper said.

He said his advice for prospective tenants was to have all references, bonds and forms at the ready, as landlords had the luxury of choosing tenants who were low maintenance and easy to deal with. 

Auckland too

Meanwhile, nationwide, the rental picture was much tamer, Skipper said. Overall listing supply was down 7 per cent across the country, with Wellington (down 12%) and Hamilton (down 9%) prominent. Supply remained strong in the student cities of Palmerston North (up 13%) and Dunedin (up 17%), and demand was steady.

Across New Zealand, the average asking rent was up by 4 per cent compared to a year ago, underpinned by Christchurch but also reflecting a 7 per cent increase in central Auckland.

Although more listings were coming onto Trade Me Property, they were “not sticking around” for long, Skipper said.

“So far this year, about a quarter of all listings in Auckland, Wellington and Christchurch were onsite for six days or less, which is great for landlords but another indicator of that strong tenant demand,” he said.

More looking to buy due to squeeze

Skipper said there were signs that pressure in the rental market was pushing prospective tenants to consider the option of buying a house.

“Looking at our property for sale activity, we can see demand from potential buyers has increased by 13 per cent over the quarter, while sales inventory remains flat,” he said.