11-01-2012
Wellington rents drop as job cuts bite
Stuff.co.nz
Rents in Wellington are dropping as demand slumps due to cutbacks to the public sector.
Rents increased nationally by about 3 per cent last year and the Property Investors Federation is predicting a another rise of about 4 per cent this year to help landlords offset rising insurance and other costs.
In Wellington, however, cutbacks in the public sector would inevitably feed through to rents, said federation president Andrew King.
He said a lot of people, especially those who have lost their jobs, had hunkered down or moved to a cheaper place.
Official figures show Wellington rents hardly moved last year, with the average weekly rent for a three-bedroom house at $462 between June and November, compared to the same period a year ago.
However, Lower Hutt property manager Jackie Thomas-Teague of Rental Results said the trend failed to show a dip in rents during the winter, as the impact of the recession came fully home.
''I think a lot of landlords are stuck on the effects of the last two years, which was effectively no rent rises at all and so they're not confident about advertising properties at a higher rate.''
She urged landlords to use the start of the year to reassess the value of their properties.
The $100 difference in average rent for a three-bedroom house in exclusive Whitby and a lesser quality counterpart in east Porirua was a classic example, she said.
Property managers Quinovic also said Wellington landlords were struggling to raise rents.
The firm had seen little change in rent levels or vacancies between the December 2011 quarter and a year earlier, ending the year at about $440 a week.
However, Quinovic's national business development manager, Juliet Robinson, said the annual upsurge in demand had only just begun and she was detecting ''a little bit of an uprise from the dip that occurred in the middle of the year''.
Landlords traditionally have the most bargaining power at the start of the year, when students find new flats and people reassess their leases.
Robinson also thought there would be an upturn in investment property sales this year.
''There are vendors out there that are really at the level now that they really need to quit their properties, for various reasons and there'll be serious investors out there that are looking to snap those ones up.''
RENTAL FACTS
Average weekly rent on a three-bedroom house (June-Nov 2011)
- Nationally - $338
- Wellington city - $462 (up $2)
- Lower Hutt - $363 (up $8)
- Upper Hutt $362 (up $9)
- Porirua $341 (down $2)
- Kapiti - $331 (up $10)
Two-bedroom apartment
- Nationally $400
- Wellington city - $446 (up $8)
(source Department of Building and Housing)
Source: Stuff.co.nz