Rental crisis looming in Auckland

Media Release

March 8, 2010

Rental crisis looming in Auckland, property manager warns.

A residential rental crisis is building in New Zealand’s largest city as landlords continue to downsize their portfolios, according to long time property management agency Bobergs First National.

Principal Wayne Boberg tracks the numbers of rentals available and houses for sale for Auckland and believes the sell off is being accelerated by the Government’s latest proposals.

“Since the Government first raised the issue of property tax changes in August last year, there has been an increase in the exodus of landlords from the rental market, mainly landlords who have been in the market for a long time.

“They have sold their properties to owner occupiers so those homes are lost to the rental market.

Trade Me figures show hundreds fewer rentals available each month since November compared with the same months the previous year.

“The number of rentals available is shrinking and with building consents down, it seems there’s nothing to replace them,” Boberg said. 

“We are finding the demand for rental properties is not diminishing and rents for even ordinary properties are rising.”

Boberg cites a recent example.  A 2bm house in Blockhouse Bay rented for $225 per week became vacant shortly before Christmas.  The landlord cleaned it up and improved the kitchen, it is now rented out at $265 pw.

“That’s a huge jump.”

The Government’s recent foreshadowing of removing some tax breaks for property investors was disincentivising landlords and “a big gamble,” he said.

“If it was costing the country $150million “subsidizing” rental properties for 27% of the population, how much will it cost to pay the extra rent subsidizing beneficiaries when rents go up?  It could end up being a lot more than $150m.

“The question that has to be asked is what incentive is there for anyone to get into rental investment?

“Who will provide the accommodation for people to rent if the private sector is not incentivized?

“If rents go up 20%, many people won’t be able to afford it, especially when wages aren’t rising and unemployment is.”

Boberg harked back to the 1980s when lower income people moved in with their families or to cheaper rural locations as they couldn’t afford to live in cities.

“With immigration tipped to continue increasing, the Government is treading a fine line.”

Ends