Slow, steady rent rises predicted for 2012

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Property investors can look forward to slow and steady rent and house price rises in 2012, according to two prominent property investment figures.

Friday, December 23rd 2011, 12:00AM 1 Comment

by The Landlord

"There's certainly room for rents to rise, especially in areas like Auckland and a lot of parts around the country," said New Zealand Property Investors Federation (NZPIF) president Andrew King.

"A lot of the costs have gone up higher than the general rate of inflation and rents have barely kept up with inflation to be honest."

King said any earlier rent rises would have been to counter the changes to depreciation, and that landlords' need to play catch up with regard to rising maintenance, insurance and other housing related costs.

"All the other costs have gone up, there's definitely room for rents to rise," he said.

King's view that rents are set to rise across the country, led by Auckland, is shared by Auckland Property Investors Association (APIA) president David Whitburn.

"There'll be some gentle rent increases throughout the country next year - and I do mean gentle," he said.

"Certainly in Auckland there is some pressure. I talk to a number of property managers in APIA and my own network, and the ones in the eastern suburbs, St Heliers, they're having a lot of demand, and their rents are going up quite nicely, ditto the city fringe."

Whitburn was less optimistic about Wellington however, citing public sector cutbacks for dampening rent rise prospects in the city.

While both King and Whitburn see rents rising, they both agree investors remain cautious.

"The simple truth is a lot of investors are scared," said Whitburn.

"They're scared because of this European thing, they think what if house prices were to fall 10%, it leaves them sitting on the sidelines."

King believes there are two types of property investor - the more serious, long term investors who make up the minority of the sector, and whom he believes are buying at the moment, and what he describes as "wannabe housing investors."

"There's a lot of wannabe housing investors who are attracted by house prices going up, because prices are reasonably static at the moment they're not there," he said.

"They'll be the type of people who will wait until prices start going up then they'll come back into the market again, and that's the bulk of them so right now, there's not a lot of investors looking."

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