Tightening Christchurch Market

We were going to focus this month on the tightening rental market here in Christchurch but those of you who live here will not that we have been beaten by an article in Saturday’s The Press.

In an article headed “Less Homes, Higher Rents” the Press talks about increasing competition for rental properties. The number of homes available has dropped significantly over recent months. TradeMe has under 670 properties listed compared to a fairly stable 1200 – 1500 each month over the past couple of years.

The article points towards Government Policy, high sales prices, seasonality as reasons and possibly each has contributed. There are other reasons as well.

Certainly, Government intervention and policy has disturbed the rental sector over recent years. Demands placed on landlords in areas of heating, ventilation, insulation, moisture control, drainage, draught stopping have placed additional costs on landlords not all of which can be passed onto tenants. Removal of tax incentives, the Bright Line test regulations, ring fencing of losses have resulted in less attractive net returns from property. Increases in insurance, rates, maintenance have also incurred higher costs. It is questionable that these numerous interventions by the Government have really added to the quality of life of the tenant

These have arisen at the same time as property prices throughout New Zealand have soared. (Yes, landlords have benefitted from the growing value of their assets but suffered from a lower return).  So, the ‘perfect storm’ scenario. Many landlords have asked themselves ‘why stay in a sector with increasing intervention. Why not take advantage of these high resale prices and then invests our gains into something else?’. 

And several have. We have lost a number of properties during the past year due to owners selling. More than previous years – and we are not alone. All property management companies are reporting the same.

We have also seen long queues at open homes. Desperate people who have lost their tenancies for any one of a number of reasons, unable to find a replacement. People wanting to rent for the first time. The competition is severe.

We have noted that the usual churn of rentals around the new Year has not happened. This is when tenants choose to move to another rental – trying to upgrade or just ‘because they can’. Except today they can’t. There is nothing to move to so they stay put.