Rentals Rise and the City is the Winner

Rental listings are soaring as homeowners avoid selling in a stagnant housing market. Real estate Institute figures released yesterday show that nationally the housing market is its quietest in more than a decade, with prices down again in June, although the Canterbury-Westland region bucked the trend with a slight increase in prices and sales.

 

Listings for rental properties on Realestate.co.nz have spiked at over 6000 this week after climbing steadily since March – a dramatic upsurge following a year when rental listings hovered between 3000 and 4000. Since March, the same site saw the number of properties listed for sale fall from 61,700 to just under 60,000.

 

TradeMe’s property website also reported a 38% jump in rentals from April to June. A combined index of advertisements on the two sites yesterday showed a 58% increase in rentals and a 3% drop in sales listings since April.

 

In Christchurch, First National members reported up to 30% more rentals on their books compared with last year.

 

Realestate.co.nz chief executive Alistair Helm said hard-up homeowners were “sitting on their hands” waiting for an improvement in the market before they considered selling. “The market has to go somewhere, and if people can’t sell then they’ve got to look for other options”, he said.

 

TradeMe property yesterday listed 1251 rental listings in Christchurch. A one bedroom property in Addington asking $165 rent per week was languishing on the site for its tenth month. More than 80 properties have been listed for more than two months and 40 properties had been added in the last three days.

 

First National general manager John Stewart said some landlords could face long vacancies in the strong rental market. “Because of the increased supply, scruffier properties will be vacant longer and owners may have to spend money to make sure their rentals are up to scratch”.

 

Harcourts Christchurch accommodation office co-owner Nigel Bowman said tenants were keen to move closer to the city to avoid the cost of commuting with petrol at record high prices. “Christchurch has never been a place where that has happened before,” Bowman said. Completion in Rolleston has resulted in landlords slashing the rent they are asking by $60 a week compared with last year. Bowman said tough times economically lead some tenants to abandon fixed-term leases in search of a cheaper option. “One just put their keys under the door on the way to the airport” Bowman said.

 

The Real Estate Institute figures show Christchurch’s median price held steady at $315,000, with sales bouncing up from 392 in May to 479 in June. In Canterbury-Westland, the median June price of $299,000 was up slightly from $296,000 in May, and sales rose from 619 to 666. The national median for June was $340,000, down from $345 in May. However, the number of sales is only about two-thirds of what it was when the housing boom ended suddenly a year ago, and prices for both New Zealand and Canterbury-Westland are about 2% down on June 2007. And sellers are having to be patient, with houses taking almost two months to sell.

 

Christchurch valuer Errol Saunders, managing director of Ford Baker Valuation, said the rally in the Canterbury market was “a bit of a surprise” , and was possibly a correction after buyers took fright in May. Saunders said that if Reserve Bank governor Alan Bollard cut interest rates this month the market might stabilize, whereas if rates were left the market might fall further.

 

In other South Island regions, median prices lost ground from May to June in Nelson/Malborough ($337,000 to $335,000), Otago ($240,000 to $225,000) and southland ($200,000 to $182,500) while the volatile Central Otago lakes area saw a leap from $490,000 to $514,000. Prices were also down in Wellington and Auckland.