Rental vacancies double as property market fails to fire

Photo / Herald On Sunday

Residential rental property vacancy rates are double what they were last year as house sales continue to dawdle, according to the First National Group.

The company's quarterly survey of its property managers from Northland to Southland shows an overall vacancy rate of over 6 per cent, twice the 3 per cent of January 2010.

First National Group general manager John Stewart said it was unusual to see a national vacancy rate this high in January.

"This level of vacancy is more normal for winter than summer. However it reflects the current low sales volumes and restricted migration levels New Zealand is currently experiencing. Volumes of unsold houses becoming rental oversupply is no surprise.

"As a generalisation, business closures and downsizing in the regional centres has seen people moving to find work but at the same time unable to sell property, leading to their homes being launched privately into the rental market pending that sale. Those vacating rentals are placing yet more property onto the tenancy market.

Property managers in Wellington were reporting the highest vacancy rates in 20 years, particulary in 'upper end' properties and the apartment market, Stewart said.

Contract work being lost to Auckland was cited one of the main reasons, he said.

In Auckland demand for all types of properties had pushed the vacancy rate to just 0.7 per cent.

At the same time rents had crept up to between 3 per cent and 10 per cent there as ex-pats returned home and immigrants from the United Kingdom and Asia fuelled demand.

Marlborough continued to have high vacancy rates due to the ongoing challenges in the viticulture industry and rents had dropped an average 5 - 10 per cent.

The rest of the country had more supply than demand but rents were mostly stable.

Stewart noted a lift in the house sales market could rapidly reverse rental trends.

- NZ HERALD ONLINE