It seems that the current rental market is one that is favouring the tenant and in some instances hurting landlords in their expected yield returns. At Irelands, we have seen a shift of power from the landlord post-earthquake to now where the pendulum has swung back in the favour of the renter.
Some quarters are referring to an oversupply of rental properties being the main driver behind a shift in demand for rentals, with 1650 properties currently available for rent on TradeMe Property . Considering that 600 properties were listed in May 2014 that is a 275% in rental supply in just under 14 months.
This over-supply is rife for the bargain hunter or the discerning renter. The bargain hunter has seen a drop on the median asking rent of $45 over the past three months , as landlords begin to drop asking prices in order to limit extended periods of vacancy. Adding to the supply equation is that just over 20,000 new homes that have been granted council consent approval since the Canterbury earthquakes  – though many of these can be accounted for in terms of replacement homes that may have been lost in the quakes.
Nigel Jefferies, a TradeMe spokesman states “From rising steadily in past years, the city’s rents were sitting flat for medium sized houses, had fallen for bigger houses, and risen slightly for smaller houses plus apartments and units”.
With an oversupply of housing, it is not just the bargain renter that may benefit. It does mean that some families and renters with particular wants and needs can also be more selective on what they sign up to. Post-earthquake, it was a ‘get what you can’ mentality due to the scarcity of properties. Now with properties premiums slipping, renters won’t settle for cold, damp houses, as the competition for the rental dollar heats up.
So what can you expect for your rental in the current market?
As you’ll be well aware, each property is different, however based on June 2015 median figures, you can expect the following.
If you are looking to rent your property, now is the time to consider the value of your rental in the eyes of a prospective tenant. A $10-20 decrease in the asking rent could mean less time on the open market in what is now a more competitive market and looks to be staying this way for many months to come.
It is also with interest, that we here at Irelands look to the current legislation change where all rental properties need to be insulated by July 2019 and the impact that this will have on the rental market moving forward. What it does show is the importance in working towards insulation compliance sooner rather than later, as insulation compliance may become one of the factors that prospective renters use when deciding on a property in the future. Consider this within your property maintenance schedule for this or the next financial year to ensure you can present a competitive advantage over the abundance of properties all seeking prospective tenants. More on the legislation changes to come in the future…
Resources As viewed on July 24th 2015.