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Barfoot & Thompson says house rents rose only 2% in Auckland in past six months

Property
Barfoot & Thompson says house rents rose only 2% in Auckland in past six months
18th Nov 13, 2:19pm by David Hargreaves
<a href="http://www.shutterstock.com/">Image sourced from Shutterstock.com</a>

Auckland's biggest real estate firm says the rise in Auckland property values is not resulting in a similar increase in property rents, with rents going up just 2% in the past six months.

Lastest Real Estate Institute figures show considerably bigger gains than that on sales of house in the Auckland area.

Figures released by Barfoot & Thompson show that the average rent ‘in force’* for a three bedroom property in Auckland in September was $455 a week.

This compares with the average rent in force in May for a three bedroom home of  $446 a week.

"The rise of only 2% in the six months will come as a surprise to many," said Kiri Barfoot, a director of Barfoot & Thompson.

"The prevailing  belief is that property investors are simply passing on higher property costs to tenants, but this is not showing up in the figures.

"Rents are increasing, but the rate of increase is lagging well behind house price rises.

"It suggests landlords are placing great store in retaining quality tenants taking a long-term view of the return they can achieve on their investment.”

The data shows that the in force rent for three bedroom homes has seen the largest increase in the six month period.

The rent for four bedroom homes has increased in the six months by 1% to $577, while that for 1, 2 and 5 bedrooms has increased by 1.6%.

The most expensive location in which to rent a three bedroom home is the Eastern Suburbs, where the average rent is now $541 while the least expensive location is Franklin and rural Manukau, where the average rental cost is $354.

*The average in force rental is the sum of all rentals for three bedroom homes. It is not the rent for new contracts signed in September.  In September Barfoot & Thompson was managing 4452 three bedroom homes on behalf of landlords.

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15 Comments

by  xingmowang  |  18th Nov 13, 3:15pm 1384740901

Who cares!? As long as, house price is high and growing, and OCR is low.

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by  Boatman  |  18th Nov 13, 3:15pm 1384740933

Huh , I am not surprised ,  because many renters have found it cheaper to rent  from a Bank for 30 years at 5% than from a Kiwi landlord.

Could this explain what is really driving the housing market .............. cheap mortgage rates?

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by  frazz  |  18th Nov 13, 3:48pm 1384742904

No problem finding a house to rent, the signs on front lawn are still there 2 weeks later (nice bunglaow Westmere), suggest a reduction in rent might be in order?

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by  BigDaddy  |  18th Nov 13, 5:50pm 1384750203

Read Olly's column why:

http://www.ollynewland.net.nz/category/news-articles/

or

http://www.ollynewland.co.nz/

This is only the beginning.

Just wait until the LVR regulations bite, he says.

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by  dtcarter  |  19th Nov 13, 4:36pm 1384832184

Surely if the LVR regs stop people buying a home to live in, and thus increase the stock of tenants, there must be a corresponding increase in homes purchased by investors and ready to rent out.

 

Only if frustrated sellers leave their properties unsold and empty could this lead to rent increases.

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by  Henry_Tull  |  18th Nov 13, 7:20pm 1384755613

So how is the loan servicing working for the buy to rent?

We have heard servicing can be bought in a sense. The theory being by showing more income than otherwise (at a cost of some more tax cash paid than would have been), the servicing calculator works fine. Deal set - Happy days, who would think income over declared.

 

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by  frazz  |  19th Nov 13, 9:06am 1384805194

Sorry BigDaddy Olly is wrong on this one. Check around any suburbs and you will see also a glut of houses to rent not just apartments. CTNZ is right on the money, and can you explain why the LVR regulations are going to change this?

 

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by  Your Landlord  |  19th Nov 13, 9:49am 1384807768

When yields on bank accounts rise, yields for property will rise too.

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by  Roelof  |  19th Nov 13, 10:09am 1384808968

Landlord...   Can u elaborate..???

It only makes sense to me in terms of Capital values ..

I don't see any relationship to actual rents..???

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by  steven  |  20th Nov 13, 7:34am 1384886074

I think he means as the OCR rises depositors will get a better % and that means a recovery in the economy and inflation and that means opportuntiy to charge more....

However, that assumes ppls wages rise as they did in the past....so no I dont agree its a certainty....in fact I think its going to get harder both from a weaker economy and a left leaning govn changing the "rules".

he's praying for a greater fool....as gamblers always do.

regards

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by  Simon  |  19th Nov 13, 10:51am 1384811504

speculation and emotion, in particular the feelings of 'missing out', especially due to the 'big housing shortage', have meant house sales prices in Auckland have gone up too fast relative to fundamentals.

There is no feeling of 'missing out' when renting, so prices go up based on real supply demand, rather than artificially amp'd up demand from emotive buyers believing all the rubbish in the media about shortages etc.

People who struggle with things are the ones who can not get their head around the difference between actual number of houses listed for sale versus number of willing buyers (this is the supply-demand that sets the prices) and the total number of properties (including apartments!) available to house residence (what should be considered when talking about a 'housing shortage, lets build 39000 more homes!).

No one with any degree of financial literacy would buy in auckland at the moment.

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by  steven  |  20th Nov 13, 7:39am 1384886375

However the few FHB's I know are a) spewing they cant pay for vastly over-priced property because of the LVR and b) Looking for someone to blame as its not fair.

Tulip anyone?

regards

 

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by  Snodgrass Thro…  |  20th Nov 13, 8:08am 1384888081

They need to get real. First home buyers today need to be disabused of the idea that they can get the view without first climbing the ladder.

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by  Johnb  |  20th Nov 13, 6:50am 1384883424

The data clearly shows that the Auckland market has had a glut of rentals, but this has come to an end in the last few weeks - see http://listings.jonette.co.nz/blog/auckland-vacancy-record.html.  

I'll try to find time to update with this week's data, but the glut has become a shortage in a very short time, LVR impact?  

I do wonder if the very high level of vacancies was due to investors jumping into the market, then finding it flooded - as someone above noted anecdotally.  high supply will offset high demand, but with migration being strong demand has to catch up with supply.

A further driver may be couples deciding they cannot buy, so moving out of "home" to their own rental is now occuring, reducing household size.

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by  steven  |  20th Nov 13, 7:30am 1384885844

For the glut of rentals to end in but a few weeks should then be shown up in independant sources of data as its such a big event....

or  maybe if your data is a one of blip/error?  look to the trend.

regards

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