Rental property glut across NZ - stats

Photo / The Listener

Landlords may be sitting pretty in Auckland, but further afield an oversupply of rental properties is driving down rents.

Latest figures from Trade Me property reveal supply outstripped demand in everywhere but Auckland city during the last quarter, as immigration slowed, public service jobs were axed, and demand for rentals in some cities dipped as the university year kicked off.

Trade Me's head of property Brendon Skipper said a lack of supply continued to dominate the Auckland rental market during the last quarter, helping to drive up rents in the city.

"Anyone who has been reading media coverage in recent months knows Auckland is tough if you're looking for a place to rent at the moment."

Average rent is up 7 per cent across the city, with further rises tipped if the current trend continues.

Elsewhere supply had turned the corner in the last quarter of last year after a period of decline, Trade Me said.

In the capital, where rents dipped by 2 per cent, there were 17 per cent more rental properties in the market than during the same time last year and fewer people wanting them.

John Stewart, general manager of real estate company First National said the oversupply of rental property was becoming an "increasing concern" in Wellington with some "very good" executive properties sitting vacant for up to six months.

"The view is a number of corporates have relocated or downsized. We are also mindful that under the National government they signalled government contractors would be minimised and that's no doubt that's having an effect in the capital," he said.

Stewart said landlords were generally realistic about the situation, and some were offering sweeteners to prospective tenants in a bid to clear the glut.

"We have heard rumours of landlords offering incentives like diminished rent if you sign for a long-term contract, or we will give you a certain heating system or we will give you a 50 inch flat screen television."

"As late as two years ago things were fine in the apartment market, it's changed there mainly since the middle of 2010."

Tauranga, Dunedin and Hamilton were also singled out as having more rental properties than demand could satisfy.

"Students at Victoria and Otago, and public sector workers from the capital have found their flats and settled in for the year, so in these cities landlords have a harder job filling their properties than three months ago," Skipper said.

Massive growth in Tauranga during the last 10 - 15 years had slowed, due to fewer migrants, creating less of a demand for new home building and fewer tradespeople in the city, Stewart said.

Meanwhile in Christchurch rentals were being tenanted swiftly, with the number of enquiries from tenants increasing 7 per cent on a year ago.

- Susie Nordqvist