Mid-price rental property in short supply

Just over half of First National’s property managers believe a good balance exists between supply and demand, while 41% believe there is a shortage of rental properties.

Wednesday, October 19th 2011, 12:00AM

by The Landlord

These are among the findings of the First National quarterly property management survey, which examined property management vacancy rates, rent rate movements and demand/supply experienced by the company’s network of property managers across the country.

The survey found 51% of property managers said there is a good balance between supply and demand, while 41% of respondents said there is not enough available rental property.

Just 8% of property managers reported an oversupply.

Nationwide, the survey found the greatest shortage is for mid-priced properties, with 50% of respondents reporting shortages. For high-end property 41% reported shortages and 29% said there was a shortage of lower end properties.

Very few property managers reported an oversupply of property, just 4% for high-end properties, 5% for mid-priced and 13% for lower end.

"As a generalisation, there is real pressure on good property no matter where or what size," said First National general manager John Stewart.

"Quality is in demand and in the main not prevalent enough."

Two offices - Ashburton and Waiheke Island - reported shortages across all prices and property sizes, while Alexandra, Cromwell, New Brighton, Glendene, Papakura, Hawera and Motueka reported a lack of rental property across the majority of price ranges and sizes.

Stewart said pressure in southern centres was largely driven by displaced Christchurch families, while in Auckland the market reflects the movement of job seekers from regional and rural areas.

The national average vacancy rate for First National properties under management is 7%, the same rate as in mid-July 2011 and October 2010.

The lowest vacancy rates were in Papakura, Howick, Palmerston North, Motueka, Nelson and Ilam (Christchurch), which all reported 2% or lower.

The highest vacancy rates were reported in Cromwell (17%), Mangawhai (13%) and Taumaranui (13%).

On the issue of rents, the majority of First National offices reported rental prices are stable compared to a year earlier for two, three and four-bedroom properties.

However, many rents have increased, especially for three-bedroom properties.

Of the respondents, 47% said three-bedroom rental levels are the same as in the July-September quarter, another 47% say prices are higher while 6% report reductions.

For four-bedroom properties 52% said rents were the same when comparing the July-September quarter with the same time last year, while 42% say they are higher and 6.5% lower.

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