Rents in Christchurch drop back to where they were three and a half years ago

Property

Rents on Trade Me Property up modestly in Auckland, rising strongly in Wellington and down in Christchurch

23rd Nov 16, 3:08pm by Greg Ninness

The median asking rent of properties advertised for rent on Trade Me Property was unchanged at $440 a week for the fourth month in a row in October, although there were ups and downs around the country.

In Auckland the median advertised rent rose by $10 to $510 a week, after being stuck at $500 a week for the previous six months.

"Auckland's rents are up just 3% on last year so landlords won't be celebrating, but it's significant to see rent expectations tick up for the first time in quite some time," Trade Me's head of property Nigel Jeffries said.

In Wellington the median rent jumped back up to $420 a week after falling slightly in September and is now up 7.7% compared to a year earlier.

In Christchurch the median asking rent has remained stuck at $400 a week for the last 6 months, which is down 4.8% compared to October last year.

"Median rents in Christchurch look to have found their post-rebuild sweet spot at $400 a week," Jeffries said.

"Rents [in Christchurch] have steadfastly remained at this price for six months and are the same as they were three and a half years ago."

Annual change in advertised rents on Trade Me Property: October 2016

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

40 Comments

by Penguin | 23rd Nov 16, 4:42pm 1479872559

I can't see rents going up until we see some wage inflation.

by Rob | 23rd Nov 16, 8:24pm 1479885844

I don't think that will be the driver. I see it relative to house price values, and what sort of mortgage people can service.In many places it is still better value to rent, which means that there is still a significant margin for rents to be raised. So once rents rise, workers will then demand higher wages, which is when you may see some wage inflation. It is a chicken and egg type of thing IMO.

by Narrabeen Boy | 23rd Nov 16, 4:52pm 1479873176

Why is bay of plenty rocketing up then?are wages accelerating there?up fifteen percent in a year

by muntijaqi | 23rd Nov 16, 5:17pm 1479874626

It must be short term rentals driving up prices. Plenty of overpriced rentals in Tauranga around summer but I'd say it's getting easier to find a place to rent than a few years ago..

by Narrabeen Boy | 23rd Nov 16, 5:01pm 1479873719

I see rents increasing as interest rates rise

by muntijaqi | 23rd Nov 16, 5:16pm 1479874570

I see rents falling as interest rates rise. Plenty of speculators will cash out or offer the houses for rent while dreaming that the bubble picks up. Plenty of empty homes and at the moment .

by Simon | 23rd Nov 16, 5:05pm 1479873927

Palmy rents still booming. Been double digit for a while now. Shortage + students soaking up all the central stuff.

by Narrabeen Boy | 23rd Nov 16, 5:24pm 1479875051

Fully tenanted for me at the moment and even got a call from one of my property managers to let me know he's raising the rent in February. First time that's ever happened!I think while the economy's going well and mostly everyone's working that's the time to raise rents

by THE MAN 2 | 23rd Nov 16, 5:28pm 1479875321

Median rent in Christchurch at $400 per week seems low.

We have no 3 bedroom homes under $400 with the the average around $460 per week up to $595 for 4 bedrooms.

2 bedroom units around $380 per week so either landlords are accepting less or there are a lot of 2 bedroom units being rented.

Have just rented one this week and first 2 lots wanted it and the one that missed out has signed up and paid for one we have coming available in January.

Most tenants are renewing for another year at this stage so it will be interesting to see what demand we have at the end of January whichis when we tend to have our rental tenancies end.

All our properties are well maintained but it makes it harder if the part time rental property owners under rent their properties.

Yes I appreciate that there are plenty of rentals available in Christchurch but it depends on how professional you are in your efforts to obtain good tenants.

Anyone can get someone to rent your property, but many you wouldn't want!

by mfd | 23rd Nov 16, 6:27pm 1479878865

If your properties are well maintained they're probably above average for Chch, so no surprise the median rent is lower than you see. Plenty of shoddy houses bringing the average down.

As always, it's the trend that's interesting.

by gordon | 23rd Nov 16, 5:38pm 1479875901

You just keep telling us how much more you know than the REINZ and Trade Me. LOL. The reality is that house prices are dropping in Christchurch and rent follows house prices.

by MikeM | 23rd Nov 16, 6:28pm 1479878884

Agree. Huge over supply brewing in ChCh. Can't sustain 400+ monthly consents forever. Something will give eventually.

by THE MAN 2 | 23rd Nov 16, 6:36pm 1479879409

Gordon, wish you would stop making things up!
Where have I ever said that I know more REINz and TradeMe?
What I have said is that I don't believe the figures Gordon.
I have many friends and acquaintances that have rentals and they certainly aren't renting their 3 bedroom homes for as little as $400 per week.
As I say there must be a heck of a lot of 2 bedroom units being rented compared to 3 or 4 bedroom homes.
As I keep saying Gordon, if you think I tell porkies, then take up my challenge that is have offered to you many times.
If I am wrong then you can gloat about it on here and be $100k better off won't you!
I am prepared to pay the cost of flying you down Gordon!
If you feel better thinking that house prices are dropping in Chch then I am happy for you Gordon!
Truth is that yes investors are not very active either,are first home buyers.
Great news for rental property owners as existing tenants stay longer don't they.

TRouble for the investors is that it is not just the 40 per cent that the Banks require for new property being purchased it is that they have decreased the loanable value down to 60 per cent on all the other rental property security that the Banks have, so a double whammy.

by nymad | 23rd Nov 16, 7:15pm 1479881755

I don't disagree with you. If you say you are getting more than that, I believe you. You have no reason to lie in this situation.

I just have to ask, though...Are the "many friends and acquaintances" the same ones that told you the other day that hundreds of thousands of Americans had registered their interest in moving to New Zealand?

by THE MAN 2 | 23rd Nov 16, 8:32pm 1479886373

Nymad, no it wasn't.
On Sunday an agent told me and I had heard it from other agents as well that the interest from the Americans was huge.

by gordon | 23rd Nov 16, 8:56pm 1479887777

And they will waltz into NZ! LOL. The government has just announced tightening restrictions for those wanting to come here. If any get in they will hardly go to a cold quake prone city that will always struggle to get back to its pre quake state. My trip to California last year was highlighted by its beautiful weather and a cheaper but higher standard of living than ours in NZ.

by THE MAN 2 | 23rd Nov 16, 9:47pm 1479890849

Well go and live there Gordon, with my blessing!

by gordon | 23rd Nov 16, 7:32pm 1479882734

ANZ put up its two year rate today and I presume others will follow as banks are greedy as we all know. So you are being hit with dropping prices, dropping rents, rising interest rates and other costs and earthquake risk of course. Is there any good news down there at all. If DTI's come into play just watch this space. And the Dow hit its all time record today. Funny how USA have an idiot in charge and the markets go up and up and up.

by nymad | 23rd Nov 16, 7:13pm 1479881614

I love this ongoing quarrel

by Kakapo | 23rd Nov 16, 7:26pm 1479882369

It exactly replicates the experience of being stuck in a car listening to my parents bickering about nothing.

by Chris-M | 24th Nov 16, 4:12pm 1479957123

Sad but I can see it getting even worse after these earthquakes. This will be the last straw for quite a few people.

by OpenPensionResolutn | 23rd Nov 16, 6:33pm 1479879188

Asking isn't getting.

by Zachary Smith | 23rd Nov 16, 7:15pm 1479881757

While that is true my experience has been that I have got what I asked for and very quickly too. To the point of wondering if I asked for too little. Mind you my policy has always been to buy houses I would be happy to live in myself.

by Narrabeen Boy | 23rd Nov 16, 7:01pm 1479880885

Don't know why he winds you up so much.if you believe in your product who cares what others think mate.get over it.

by THE MAN 2 | 23rd Nov 16, 8:41pm 1479886875

Why, because it gives Gordon an interest.
Apart from his huge amount of shares he wouldn't have anything else to do except to try and p--- me off.
He keeps waffling on about Chch prices and rents that he has no idea about.
My rentals give me plenty of time as apart from abit of maintenance that I do, I have suppose I have too much spare time nowadays, but I have tried to wean myself off here, but then gordon gets me to bite.
Suppose I should harden up and let Gordon play his little games!

Would love him to take up my challenge that I offered him, but up until now he hasn't been prepared to take me on.

by Zachary Smith | 23rd Nov 16, 7:08pm 1479881330

"Auckland's rents are up just 3% on last year so landlords won't be celebrating"

Seems like a good reason to celebrate to me!

by GenY | 23rd Nov 16, 9:04pm 1479888241

Quite simple really, rents are a function of actual supply and demand for houses to occupy whereas house prices can be (and have been in Auckland) influenced by speculation and excess demand from people wanting to buy for ongoing magical capital gains via bigger fool theory. Heres some other facts: If you track the number of rental listings on Trademe as a proxy for rental supply as I do you will have noticed that relative to population there is a large difference in supply of properties for rent in Auckland/Hamilton/ChCh vs Tauranga. e.g. in rough terms: Auckland Population c 1.5m/4140 current Tradme rental listings = 361 'head of population per house listed for rent'. Hamilton = c150k population/612 Trademe listings = 245. CHCH = c350k population/1971 Trademe listings = 178. Whereas Tauranga has c130k population/ only 202 Trademe listings = 644. I.e. 645 ppl for every 1 house available for rent in TGA vs only 178 ppl for every 1 house available for rent in CHC at the other end of the scale. While all of these numbers fluctuate this has been consistently the case in terms of relativity over the last 18 months which I have been tracking it. It is no surprise that with these figures we see at one end of the scale TGA rents increasing dramatically and at the other CHCH rents falling and AK rents near stagnant. If there was the shortage of 30k houses bandied about in AK wouldn't we be seeing rents rising dramatically? Reason we are not is because there are in fact many houses available for rent because every man and his dog have jumped on the bandwagon and become 'property investors' which has flooded the city with rental supply. The shortage was a shortage of houses available for sale when everyone was snapping up 2nd, 3rd & 4th houses however sentiment is now changing, and the ponzi is nearing an end in AK i.e. sales dropping and inventory increasing. TGA on the other hand is benefitting from very strong local economic growth and job creation along with the influx of internal migration via AK refugees looking for a better way of life and eager to fill these positions - if you were going to leave AK because of the high house prices, shocking traffic and the resulting poor lifestyle on offer and were choosing between TGA and Hamilton I know where I would go

by Simon | 23rd Nov 16, 9:22pm 1479889356

Nailed it.

Similar thing can be done with for sale listings too.. gives an idea of ppl per listing; and ultimately number of buyers per listing.

Try crunching numbers for Palmy you'll quickly see why I'm so keen on the place and explains the continuously strong rental growth;

85k population, 121 for rent; 702 people per rental listing. Blows away even tauranga in your example above.

Palmys boring though so only a few people who crunch numbers and look at facts not opinions and BBQ banter will figure this out and get in before locals bid house prices through the roof there also

by linklater01 | 24th Nov 16, 7:47am 1479926855

GenY,

I wish you would stop telling people to come to TGA/The Mount. They are just clogging up our roads and making my favourite cafes too busy. Come summer,when I want to walk round the Mount,I have to park miles away. Can't they all go and live somewhere else,like Tokoroa?

by rastus1 | 24th Nov 16, 8:22am 1479928959

yeah... Tokoroa...popn 13,600, houses for rent trademe 2 = 6,800 per house. Investors dream.

by nymad | 24th Nov 16, 8:27am 1479929244

Exactly my point, below.

by two otherguys | 24th Nov 16, 8:51am 1479930694

Now isn't that a parallel foretaste of the Auckland experience
Clogged Roads, difficulties accessing the enjoyable spaces and places you have long enjoyed
In Auckland they have now closed access to 5 volcanic cones
Can no longer do what you once could do
That right has now gone
It was not a birthright after all

But wait, you will be able to engorge on every possible culinary delight of ethnic takeaways

by nymad | 24th Nov 16, 8:26am 1479929213

That logic is pointless without any baselines.
The best you have stumbled upon is a loose correlation that supports what we would generally expect to see..

by Simon | 24th Nov 16, 9:19am 1479932361

As GenY has said he has been following the numbers over time as I have for my areas if interest.

The key assumption being all areas would expect a similar proportion of the population to be looking for a place to rent (for whatever reason). Obviously student cities like PN could expect more transients in the population than somewhere like tokoroa where ppl unlikely have any reason to look for a new place to rent.

Tokoroa like most area near Hamilton is also booming funnily enough, although once you get very small then the data gets extremely volatile and less reliable.

by nymad | 24th Nov 16, 10:31am 1479936665

Yes.
But, what's the threshold for equilibrium? i.e. the rate at which we have a steady state of rental yield? What are the marginal values of idiosyncratic differentiation? Without knowing that, there is no scientific basis for investment.. Isn't that the basis of the whole business cycle - imperfect expectations?
If we had a largely high density/apartment based supply, I would agree that this might be an appropriate proxy. But not in our context..

Like I said, it's a good correlation that supports our notions of what would happen. But, that's all it can ever be without some sort of validation.

by Simon | 24th Nov 16, 2:19pm 1479950398

Steady state in real terms can be seen in the Auckland example where around 3% growth would be expected (350 ppl per listing)

As number of ppl per rental listing get over 600, that clearly relates to somewhere above the threshold of equilibrium (to be fancy and appear smart without actually adding anything to what had already be explained above...). You don't need to know the exact figure where the threshold is to see that 700 ppl per rental listing is more likely than not going to add pressure on rents, especially if you've followed this over different parts of the cycle and seen 300 plus rental listings , now see only 120 as demand soaks up supply.

"Marginal values of idiosyncratic differentiation" ?? You'll need to explain this to me.

Modelling is imperfect by nature, that's why we model things and make assumptions, so we can simplify things and make predictions (eg change input 1 = a predicted change in output).

by GenY | 23rd Nov 16, 9:52pm 1479891141

Yip exactly. I would be very worried if I was holding a negatively geared investment property in AK right now. The sad thing is the last people on the boat are the most ignorant ones who are driven by FOMO and don't even know they should be worried yet! Some will be starting to worry but will be kidding themselves and reassuring themselves that they have made the right decision getting 'on the property ladder'. The reality is they have purchased an overpriced 'asset' which is costing them (often significant amounts) of money to own/top up and which is depreciating in capital value as we speak not to mention all the other risks involved with property investment. These people should accept the mistake and exit through the small door before everyone rushes for it (which I think has already begun i.e. sales numbers dropping significantly and inventory rising). The LVR rules have taken away the magic of easily and quickly recycled equity which continues to pump the market up in a boom with all the extra demand from investors compteing with each other and creating a ponzi of sorts. As the Bank CEO said himself a few months back - AK is overcooked. The fundamentals simply do not support the prices being paid by completely ignorant bandwagonees

by rastus1 | 24th Nov 16, 9:07am 1479931679

More spruiking from the Herald this morning...advertising dressed up as news.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=117…

by Simon | 24th Nov 16, 9:59am 1479934743

Locations where large scale housing developments are planned hit the top 5.

Like the "regional hotspots' which mention only 3 regions: Palmerston North, Whangarei, New Plymouth.

by Groen_mamba | 24th Nov 16, 1:50pm 1479948625

Anyone been at some auctions today?