Be wary of raising rents
Thursday 8 July 2010
Landlords would be unwise to consider raising rents just yet, unless there is absolute room to do so, according to Barfoot & Thompson.
By The Landlord
The Auckland-based real estate company reported the average weekly rent in Auckland for June increased $5 from May to $403 and was up $15 from June last year.
However, Barfoot & Thompson chief executive Wendy Alexander says landlords need to be careful about how they read the increase in figures and says there is a lot of hype and speculation in the market around rents due to Budget changes and next year's Rugby World Cup.
Alexander says there are a few factors currently influencing the increase in rents, for example landlords anticipating higher upcoming costs and the fact a number of new properties have come onto Barfoot's management books, which always influence the figures.
But she says the more important issue landlords need to consider is that although rents are up $15 from the same time last year, it is merely a pattern of variation rather than a trend.
"They do go up and down," Alexander says.
To give some perspective around the June increase, the average rent in March, according to Barfoot figures, was $401 per week. June's $403 is also only $6 more than the weekly average in May last year of $397 and $4 up on April 2009's $399 (compared to $398 in April this year).
Alexander says if increases continue further into this year, then it may start to look more like a trend, but warns landlords not to increase rents unless there is definitely room to do so.
"Rents are steady as they go. Landlords would be unwise to shake good tenants by subjecting them to increases in rent."
However, figures from Trade Me for the second quarter of this year show Auckland listings for available properties to rent have fallen 32% compared to the same time last year, which has in turn pushed rents up 9%.
"Anecdotally we're hearing the drop in supply is due to reduced turnover as tenants are sitting tight on their properties and landlords are opting to lock tenants into long-term tenancies," head of Trade Me Property Brendon Skipper says.
Nationally, enquiries per listing are up 22% on the same period last year and Trade Me puts the national average rent at $380, increasing 4% from $365 in Q2 last year.
The number of rental properties listed nationally has also continued to contract, with supply down 18%.
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