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'

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.

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5 Comments

Like I said in my other post, I bet this makes some people froth at the mouth. Those people down there don't deserve this, and they will most probably just move, either to the country or to Australia. Too much greed in NZ.

And when was it that, in the name of dampening the Weevils of Speculation, the depreciation allowance was binned?
 
Ah, the sweet cloying smell of Unintended Consequences....

Well I'm in Christchurch and fortunately am not renting.  If I was having to rent I'd just leave.  The salaries on offer here just don't cover the expensive rents (not to mention other expenses).  Ultimately the situation will balance out with a shrinking population if the houseing supply doesn't increase.  In the short term however it does take a while for people to become fed up and leave and go through the process of shifting thier lives.  And don't forget that returning expats will take a look and Christchurch and many will be thinking twice.

ABSOLUTELY ENTIRELY 100% BROWNLEE AND SUTTON'S FAULT.
 
They have for all intents and purposes booted thousands of homeowners in the red zone out of perfectly liveable houses, then they have left these excellent homes (many with under $10k in damage according to EQC) vacant and derelict (these are modern or nearly new upmarket homes mainly).
 
On top of this they are focusing on fixing houses in the west which are perfectly liveable now, but are booting the owners or tenants out for 1-4months each to do repair work (which from what I've seen in many cases is not a proper repair and will simply fail in the next quake).  This is obviously putting unnecessary pressure on rentals.
 
While in other areas houses with more damage that are entirely repairable (for instance collapsed chimneys and cracked plaster in plaster and lathe (pre WWII) houses are sitting idle as EQC glacially process claims.  We have several houses that could easily have been fixed by now sitting vacant because EQC refuse to move the claim forward in any reasonable timeframe.  Fix these types of houses first and then move on to liveable ones.  Or at least just settle with the owners in cash so they can get on and do the job properly themselves rather than waiting for EQC and Fletchers to do a bodge.
 
Of course all of this is putting pressure on rentals not just in ChCh but also in Auckland where many thousands of Cantabrians have already moved.  (We have been in Auckland buying replacement properties because it makes no sense reinvesting in ChCh despite the rental demand because of the ridiculous insurance situation, the poor and local and central government response let alone the risk of another quake).

Excellent point Chris.  While the quakes themselves have obviously been devastating, I fear it will be governmental and bureaucratic incompetence that proves to be the killer blow for Christchurch. 
 
After people were forced to build in what have now proven to be liquefaction-prone areas by urban limits, they were then kicked out of their homes by the government, whether or not their homes had actually been damaged. 
 
To make matters worse, these insane urban limits continue, preventing people from actually building new homes in the safer areas.  Not surprisingly, stories of soaring rental and house prices are emerging. 
 
To me the situation in Christchurch is a microcosm of what is wrong with New Zealand and why this country continues to underperform economically.  We have excellent natural resources and plenty of human talent but we continue to be let down by the morons in charge, who think they know how to run our lives better than we do.
 
For instance, why do we still have an Earthquake Commission?  Can anyone tell me what use it has been, and what it can do that private insurers can't do much more efficiently and cheaply?
 
With the mess it is presiding over in Christchurch (and the City Council needs to share the blame), it wouldn't surprise me to see the government try and distract us with another ""issue." Chinese boat people, perhaps?