Rents set to rise as demand increases

First National Group's quarterly survey of its 70 New Zealand offices showed consistently increasing occupancy rates and the lowest vacancy rate for four quarters, halving from 6% in mid July to under 2.50% mid April.

First National's general manager John Stewart attributes the increasing demand to a lack of building, organic growth, continuing immigration, reduced emigration and shrinking of available stock.

"If the pressure continues, rising rental rates may not be far off."

Trade Me Property has seen a 20% drop in national rental listings for the first quarter of the year, which represents more than 10,000 fewer rental listings than at the same time last year.

The number of renters also appears to be rising, with the website seeing a 24% rise in email questions from renters compared to a year ago.

First National's survey recorded a quarter of properties managed by the company raising rents, with 51% recording no change and 23% having dropped rents slightly.

While some areas reported the usual flurry of changes, many said tenants were sitting tight.

"The property management industry has been in a state of flux since late last year when the government alluded to likely taxation changes for the sector," Stewart said.

"Certainly in some areas, landlords have been down-selling holdings, either in anticipation of taxation liability after the May 26 budget, or in advance of tenants voting with their feet through preferring warmer, dry, newer properties over old, cold and dreary."

Rent levels in Auckland set new records in March according to the latest research from Crockers and are now 23% higher than nationwide rental levels.

The quarterly Massey University residential rental market survey says Auckland regional rents are often a leading indicator to future national trends.