Barfoot & Thompson’s latest quarterly market update shows that Auckland’s rental market is under pressure with the vacancy rate at 1% and nearly 50 prospective tenants for each rental property.
The agency’s director, Kiri Barfoot, said the city’s rental market is under strain and both landlords and tenants are beginning to feel it.
She said they received 107,268 enquiries between January and March this year and that meant that, on average, there are 44 prospective tenants for every available rental property.
“We are seeing record online registrations to view properties. On average around 20 people register online to view a property.
“But we’ve seen incredibly high demand in some instances. A record 105 people registered online to view a single rental property in Epsom recently, which was unprecedented.”
At the same time, the vacancy rates for properties in the agency’s rental portfolio has remained at 1-2% for over a year.
In Auckland City, which encompasses the central and eastern suburbs, the agency had just 209 homes available for rent as at May 8 2017.
The data showed that most central suburbs currently have three or fewer properties available.
This situation is replicated across the rest of Auckland. On the North Shore there are 77 properties, in Waitakere 71, and in Manukau 133.
Barfoot said the number of properties they manage has been increasing 9% year-on-year.
“So it’s not a matter of fewer listings; rather there are simply not enough rental properties to go around.”
High demand and limited supply of rental stock, along with rising costs for landlords, are contributing to rising average rents.
Across Auckland rents were up by around 4.6% on average in the January to March quarter of 2017 as compared to the same quarter the year before.
The average weekly rent across all property types and locations was $531, up from $508.
Average rents rose more in South Auckland (up 6.4%) and slightly less in Central Auckland, Franklin/Manukau, and Pakuranga/Howick (up 2.8%, 3.2% and 3.4%, respectively).
Barfoot said the average rent for new tenancies increased at a faster rate than the overall average.
The average rent for new tenancies was up by 7% in the January to March quarter of 2017 as compared to the same quarter the year before.
There are fluctuations in rent for new tenancies but rent for new tenancies is rising, she said.
“Landlords are having to face the reality of needing cashflow to maintain and improve their property, cover increasing insurance and rates, and to prepare for increasing interest and compliance costs.
“Residential property is a conservative investment and landlords don’t like increasing rent. They prefer a trustworthy long-term tenant who pays the rent on time and looks after the property.”
That means that when a property is vacated, it is a far better time to balance costs versus incoming rent, Barfoot said.
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