In the current economic climate it has never been harder for young families to purchase their first home. Soaring house prices in big cities like Auckland are making home ownership all but impossible. A direct result of this is a booming rental market. A recent article featured in the New Zealand Herald on New Zealand house rentals states that as many as 200 people are applying to be tenants at a single property in the city and on the city fringes. Property viewings have become auditions, students and families alike are finding it extremely difficult to get into a rental property of their choice. Rent prices are now a starting price in what sometimes becomes a bidding war for who is willing to pay the highest amount.
Massey Universitys real estate analysis unit shows a quarterly increase across New Zealand in rent prices of 3.3% ending February 2011. The most notable annual increases are in the main centres with Auckland areas leading the way. Waitakere prices increased 8.8%, while North Shore rose 6.3% and Auckland City rose 2.7%. Other areas with rising rent prices are Rotorua increasing 7.3% and Christchurch 6.9%. These increases are alarming especially in a struggling economy where people are finding it harder to find work. Although there is an increase in rent prices there is also a decrease in rental listings on websites such as TradeMe. Supply simply cannot meet demand and rising prices are not slowing this demand down.
Christchurch is an interesting market at the moment with a lot of rental homes damaged by the recent earthquake. Undamaged properties have become hard to come by and the prices have increased accordingly. This has led to some Christchurch residents moving out of the area and heading to other main centres such as Auckland and Wellington putting more strain on these markets. Some people are calling for rent control in the Christchurch area due to the increase in prices. However there is little evidence to support these claims of rent spikes with some experts stating the rent increases are simply the norm in the current rental market across the country.
With high unemployment and middle class families unable to make home deposits or mortgage repayments, a whole new demographic has entered the rental market. Some people have to sell their homes and move into rentals, again highlighting the fact that the New Zealand housing rental market is growing. With the demand far out weighing the supply in main cities such as Auckland, landlords are able to let sub-standard properties at exorbitant prices. Looking at the current figures people can only expect prices to continue increasing while New Zealand house rental listings will continue to decrease. Be careful when choosing a rental property, and make sure you seek expert advice in these interesting times.