Christchurch exodus soaks up rental capacity - First National

Residents quitting earthquake stricken Christchurch are soaking up excess rental capacity in both North and South Island towns, according to First National Group.

Tuesday, April 19th 2011, 12:00AM

by The Landlord

The real estate network's quarterly survey of its property managers found demand for rentals was steady and rents were rising more than 12 months ago.

First National's property managers reported a national vacancy rate of 4.8% for the quarter, compared with 2.5% the same time last year. However, that was partly caused by Christchurch having higher vacancy numbers than usual because of uninhabitable properties.

First National Group general manager John Stewart said the earthquake has dispersed residents to areas including Auckland, Timaru, Ashburton, Blenheim, Nelson and Central Otago, reducing rental availability in those areas.

"The earthquake has certainly caused dispersion but also families are sharing with other families as job losses on top of home and contents is causing financial stress," he said.

"All these factors influence vacancy rates but must not distract from the real picture which is that demand is pushing rents up in more places around New Zealand that the same time last year."

Stewart also referred to a recent TradeMe report which said listings were up 11% on the year while demand was down just 1%.

"Perhaps the excess listings reported by TradeMe is also due in part to private landlords trying to rent out properties not up to scratch, as our property managers commented on the need for good quality homes with an increasingly discerning tenant populace."

Among First National's property managers, 37% reported increased rents year-on-year (up from 26%), 47% reported rents at the same level (from 51%) and just 16% reported rent falls (from 23%).

Median rent rises across different sized properties were $10 per week for two bedrooms, $20 per week for three bedrooms and $30 per week for four bedroom properties.

Median rent falls were $10 per week for two bedroom properties, $15 per week for three bedroom and $20 per week for four bedroom properties.

Stewart said within most towns, the types of property either in shortage or oversupply varied.

"Supply and demand in all but four offices was a mixed bag. Even some areas where demand is highest have oversupply in some types of property. For example some parts of Auckland, where vacancy rates are lowest, reported an oversupply of high end four bedroom properties in their area," he said.

One and two-bedroom properties were the most oversupplied while three bedroom properties were in the highest demand, especially in the mid range in price. However, 32% of offices reported shortages of lower priced properties, suggesting tenants were downsizing.

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