Tenant turnover trending down
Thursday 2 August 2018
Tenants are staying put for longer and that means the rental market has got significantly tighter, according to a new report.
By The Landlord
The Massey University Residential Market Report, which tracks mean rents and rental bond numbers, shows there has been a steady increase in the number of people renting over the past decade.
This increase in tenants has been coupled with a decrease in vacancy rates.
Report co-author, Associate Professor Graham Squires, says these changes are due to the combination of an increasing population and a decrease in home ownership.
“The long-term trend shows fewer first-time homebuyers as deposit values rise out of reach, which means many are renting for longer.”
Further, the report provides clear signs that rental markets have tightened over the past five years across New Zealand.
The number of new bonds lodged shows the tenancy turnover rate for rental properties is on a steady downward trend.
That downward trend in tenancy turnover is fairly consistent in both small and larger cities and has accelerated over the last five years.
Squires says that one of the first signs of a tighter rental market is a decreased vacancy rate, followed by rent increases.
“Renters tend to stay longer when it is difficult to find alternative accommodation, and families generally prefer to stay put if their children are settled at school.”
It is generally accepted that rents around the country have been moving up of late, after a relatively static period.
But, according to the report, rents have increased steadily over the past five years across the board, with the average national rent increasing by 25.5% over that time.
Some of the largest increases have come outside of the main centres, particularly in the tourist areas of the South Island like Queenstown which saw a 62.3% increase in rents.
In the North Island, the Western Bay of Plenty District, which adjoins Tauranga, saw a five yearly rent increase of 51.5%.
There have also been significant increases in rent over the past 12 months.
The national mean rent increased to $411 per week from May 2017 to May 2018, which is a new high and represents an annual rate of increase of over 4%.
Squires says that, overall, rents continue to track above the rate of inflation and that these trends are unlikely to change in the immediate future.
“The outlook is for a tightening rental market both in terms of demand, due to population increase, and supply, due to constraints in the number of rental properties available.
“This is despite the appeal of property investment in New Zealand.”
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