Public opinion might hold that landlords – particularly in Auckland – are raising rents to dizzying levels, overcrowding properties and raking in a fortune.
But this is not the case.
Rental markets in the major cities returned a mixed bag of results in 2015, according to Crockers’ latest research.
In Christchurch and Dunedin, rental prices declined modestly, while Wellington’s rental prices remained stable.
In Auckland, there was a 9% rise in prices for two bedroom properties, but prices for three bedroom properties remained flat.
The Crockers research also indicated that rental returns in Auckland continued to weaken in 2015 - because increases in sales prices far outpaced any increase in rental prices.
This means a property bought at the median price of $734,000 and rented out at $500 per week for 52 weeks, would have a return of 3.5% (before expenses).
In 2012, the return would have been 4.5%.
Christchurch and Dunedin also saw slight declines in rental returns. Again, this was because sales prices increased faster than rental prices.
In 2015, the average rental return was 4.7% in Christchurch and 5.4% in Dunedin.
This is as compared to 4.9% in Christchurch and 5.6% in Dunedin in 2012.
Rental returns in Wellington have remained steady, on 4.8%, as rental prices kept pace with sales prices over the same time period.
NZ Property Investors Federation executive officer Andrew King said the rental market has been flat in most parts of the country for a number of years, although incomes have slowly been increasing.
“And, despite record low mortgage interest rates, the costs for landlords have also been increasing for a number of years.”
He said the rental market is likely to show a modest lift of 1 or 2% over the coming year.
This all gives further weight to recent Trade Me Property data which indicated the rental market is actually weighted in favour of tenants.
However, there has been a slew of recent articles about terrible rental offerings, including the renting out of beds in shared bedrooms.
King said the headlines of these articles state it is the landlords, but then the examples they present aren't landlords at all.
To his disappointment, rental property owners seem to be a favourite target for the media.
He said all the cases he had heard about were flatmate type situations or live-in managers at boarding houses.
“I don't think many landlords would do this as it would be hard to administer and would not really increase rental income much, but would increase wear and tear on the property.”
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