- Trade Me says the number of available rental properties is at an all-time high
- Demand from tenants is decreasing
- Landlords face vacancy when they raise rents
Rental properties are standing empty as new tenants are hard to find, and landlords need to recognize it’s now a “renters’ market,” property managers warn.
There are more homes for rent nationwide than ever before, and the nationwide median weekly rent has fallen for the first time this year, Trade Me’s latest figures show.
The Auckland and Wellington regions saw a huge surge in supply last month, with their rental stock increasing 16% and 45% respectively from the same time last year.
Auckland property manager Tina Dunsmuir, of Professionals Onehunga, said there were so many available rental offers, her company was struggling to rent property and it had become a “renters’ market”.
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While the CBD apartment market has been oversupplied since Covid struck and international students disappeared, the supply equation had now shifted in favor of renters in the city, she said.
“Most rental properties are vacant for four to eight weeks before being re-rented, and the number of inquiries has declined.
“This is the first time we’ve seen rents fall below what the previous tenant paid just to make the house attractive to a new tenant.”
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With the large increase in the number of available homes, landlords looking to raise rents may not find a tenant if they do.
Winter was normally a quieter time for the rental market, but the current market was the slowest she’d seen in the business in 12 years, she said.
“We hear landlords say there are too few rental properties so they can raise rents, but that’s not the case. If tenants want to negotiate rents, now is the time to do so.”
Ryan Weir, director of Property Scouts, said his franchises had noticed an oversupply of rental properties in Auckland, which had led to a drop in tenant inquiries and falling rents.
Auckland city apartments continued to be the hardest hit, but up to 80% of booked visitors failed to show up to citywide viewings, showing tenants had more options, he said.
“Properties that we usually rent after two viewings now need eight, and we see higher rental rates not going through.
“In one case, a property was offered to five consecutive tenants and none of them went through, and that’s because tenants have a choice in today’s market.”
In another case, a property in Onehunga that would normally bring in $570 a week was renting just for $495 a week, a 15% drop in rent, he said.
But it wasn’t just the Auckland rental market that had changed. The President of the Residential Property Managers Association, David Pearse, said Wellington was facing the same issues.
He recently had a case where a Wellington tenant suddenly left a fixed-term contract and the property could only be re-rented for $100 a week less than before.
“We are also starting to hear about it in other parts of the country. In Hawke’s Bay, which has been in short supply for a long time, the number of surveys has declined and tenants are thinking twice about more expensive rental properties.”
It was all about supply and demand, he said. Rents have risen in recent years due to a shortage of rental housing and a high demand.
“But now there is an oversupply of rental properties with a lot of new construction coming onto the market, and owners choosing to rent out their properties because they can’t sell them. And people are going abroad, so the demand is less.”
Landlords who wanted to raise rents may not find a tenant if they did, Pearse said. “Instead, they should think about downsizing. The market has changed and we need to get that message across to landlords.”
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David Faulkner, General Manager of Property Brokers, says high rents contribute to the brain drain.
David Faulkner, Property Brokers’ general manager of property management, said the changes would trickle down to the counties, and it was a good thing because many provincial areas have seen the biggest rent increases.
Rents in Auckland had risen by 2% to 3% a year in recent years, while in the provinces rents had risen by 10% or even 15% a year, he said.
“Traditionally, the annual increase is about 5%, so 10% increases are not sustainable. They are also not good for the country because they contribute to the brain drain. Young people know they can earn more money and pay less rent in Australia, so that’s where they’re going.”
With tenant demand declining and rental supply increasing, rents flattened and landlords should become more creative in attracting tenants and keeping rents, Faulkner said.
“For example, they may want to consider owning a pet-friendly rental home. This situation is good for tenants because it gives them more bargaining power, and it is generally not a bad development because it provides more stability in the rental market.