Light at the end of the tunnel?
What a fascinating time we are experiencing in the rental market post lockdown. No one really quite knew what to expect as the coutnry slowly got moving again. Demand has reached significant levels, more than what was experienced 12 months ago in July 2019. However, it is not quite the demand that we are all accustomed too over the busier months of summer. No surprises there. However, as demand is stronger than what many people may have anticipated, so too is supply with an increase in stock that is available.
The increased range of stock has given prospective tenants the chance to shop around giving them greater choice in a region that traditonally has and they now feel spoiled for choice in a region that traditionally has a very low number of rental properties and high rent in return. As of the 13th of July, there are 612 active listings on TradeMe which are larger than expected numbers for this time of year. However, to give you a comparison, Christchurch, which has a similar population to Wellington, consistently has over 1,000 properties available to rent. Supply vs. demand is always the great driver on price.
In my previous blog, I emphasised the importance of marketing your property to the highest standard to ensure it stands out from the crowd of rentals on the market. This approach has not changed and it is now more important than ever that it is adapted to overcome the unprecedented situation of high rental stock in Wellington. A key trend that we are seeing is that more and more prospective tenants are placing heavy reliance on the listing photos to decide whether they are prepared to take the next step and enquire, and then eventually apply.
THE NUMBERS
It isn’t all doom and gloom for owners wanting to rent their home right now. The double whammy of COVID-19 and the notoriously slow months of winter can be a scary thought and a painstaking process, but we are seeing growing interest, and the fantastic sight of more people coming through our open homes once again! The numbers really do speak for themselves, and is a testament to the expectation that more people would be looking for their next dream home post COVID-19.
One of our properties in Miramar had eight groups through and was rented for $950 per week with only two weeks on the market. That must certainly silence any critics that think that the eastern suburbs are facing a long struggle ahead!
More recently, we had an astounding ten groups through a three bedroom property in Newtown at $750 per week and have already received six applications.
These numbers are sure to make heads turn, and demand outweighs the interest we had in July last year. This looks certain to continue over the next four weeks as the mid-winter rush hits full throttle!
THE FACTS
The numbers really come as no surprise. Extended fixed-term tenancies concluded on the 26th of June which ultimately meant landlords could give notice. Not only that, it is my firm belief that tenants caught a bad case of cabin fever due to the Level 4 lockdown and now want a change of scenery..
As mentioned earlier, prospective tenants now have the opportunity to broaden their horizons and be more ‘picky’ when it comes to searching for rental properties online. One trend we are seeing is that getting people through the door is unfortunately not enough to qualify them. The big step is the application process and once the application has been submitted, the certainty of a lease being signed then grows.
Market prices continue to drop as owners become increasingly competitive to get their properties rented so this really is the perfect time for prospective tenants to search for their next home and take the flurry of opportunities that very few people had pre-COVID only four months ago!
On the other side of the scale, the numbers don’t lie. Demand for rental properties remains, and this is as good a time as any to rent your property out and get a convincing rental return as a result. For investors, there is still plenty of value in the rental property market so I would advise you to not shy away from that if it is in the realms of possibility! At the end of the day, people need a roof over their head, and moving forward, the capital will continue to have a shortage of stock as things slowly start to recover from the repercussions of COVID-19.
The property market is not taking a dive as many expected, and instead, it is picking up speed which should provide plenty of confidence to all you landlords out there! September will certainly be the month to watch with the upcoming election and the addition of continued uncertainty around finances and employment for Kiwis, but the early signs are looking very positive indeed.
If you are having any difficulty at all managing your rental property or portfolio, or if you are just after some assistance, do not hesitate to get in contact with me. Tommy’s Property Management is pleased to offer a free, no-obligation rental appraisal and advice. No conversation is too difficult and we are more than happy to do our best to assist.
Jack Sargentina
Business Development Manager
Tommy’s Property Management