Four-bedroom homes in demand

Four-bedroom homes in demand as tenants seek long-term rentals
14 July 2011

There’s a national shortage of four-bedroom homes for rent as tenants seek long-term rentals priced in the mid to high-end range, First National’s quarterly property management survey shows.

The survey, for the three months to mid-July, measures property management vacancy rates, rent movement and demand/supply experienced by property managers in the First National network, which covers the length and breadth of New Zealand.

According to 47% of First National survey respondents, there are not enough available rental properties to meet tenant demands. For 31% of respondents, there is a good balance between supply and demand, while 22% of property managers report an oversupply.

While two- and three-bedroom homes are in demand, the most noticeable shortage reported by First National property managers is for four- plus bedroom homes priced in the mid to high-end range.

First National Group General Manager John Stewart says the Government’s support programme for home insulation and heating has had a major effect on tenants’ aspirations.

“As First National has said in the past, tenants are cherry-picking and choosing more modern, insulated and warmer homes. Homes without good heating will languish on the rental market, particularly at this time of year,” Stewart says.

“Tenants are seeking more permanent or long-term homes as they put off purchasing their own homes. The residential sales market is wide open for cashed-up buyers at the moment, but people are waiting in anticipation of lower prices, a change which First National believes is unlikely,” he says.

The national average vacancy rate for First National properties under management is 7% compared with 4.8% in mid-April 2011 and 8.4% in mid-July 2010, the survey showed.

The highest vacancy rates are in Central Otago (11%), Northland (10%) and Bay of Plenty (10%), while the lowest vacancy rates are in Canterbury (3%), Blenheim and Nelson in the Upper South Island (4%), and Taranaki and the lower North Island (4%).

“Central Otago has a concentration of holiday and short-term rentals and the late start to the ski season has affected that market,” Stewart says.

“Our property managers in Christchurch have noted a surprising shift in turnover trends.

“Instead of waiting for 12-month leases, landlords in Christchurch are happy to sign up short-term tenants in the belief that the market will continue to be strong. They expect residents to continue to seek rental properties as they cope with changes in their circumstances in the wake of Canterbury’s earthquakes and extensive property repairs in the coming months,” he says.

“Anecdotally, in central Auckland and Wellington, landlords are also content to take short-term tenants presently so their properties are vacant again for high-priced bookings for the World Cup in a few months’ time,” Stewart says.

The survey showed 44% of respondents indicating prices are up from anywhere between $5 and $100 per week depending on the region, but on average the increase is $10 to $15 per week.

Nearly all of Auckland and the Bay of Plenty regions noticed rental prices had increased since last year, with the biggest increases in Waitakere and Waihi Beach.

A total of 41% of respondents report rental prices are the same as mid-July 2010, while 14% of property managers say rental prices are down.

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