No one is entirely certain of what to expect as restrictions loosen and our boarders gradually reopen. Presently the time it takes to find a resident has increased from 3–4 weeks to 6–8 weeks, while the supply has soared to over 1000 listings currently active in Wellington City. Historically Wellington has had a shortage of rental homes and high rent as a result. As owners become restless, we are experiencing substantial price decreases at the higher end of the market. Wellington, however, is only one of several cities throughout New Zealand that is suffering through a similar supply vs. demand situation. Christchurch, which has a similar population to Wellington has more than 850 active listings, whereas Auckland has more than 3300 active listings – triple Wellington City’s stock levels.
So, what is happening to the rental market?
Trade Me figures show a record high supply of properties nationwide, combined with a drop in demand for rentals. The rental market has seen a significant downturn because of an increase in the number of properties listed for rent while renter interest is waning, particularly in Auckland, Wellington, and Marlborough. The number of houses offered for rent on Trade Me Property reached a record high last month and increased 12 percent nationally from this time last year. The supply in Wellington jumped 45% year-on-year, while Auckland and Marlborough also saw a record number of listings. Demand for rental properties was also down 8% nationwide. The range of stock, predominately in the 3-bedroom market has given residents a range of choice with size and location being their two deciding factors. As of 12th of July, there are over 1010 active listings in the Wellington region, with 1–2-bedroom properties making up over 559 active listings on TradeMe and roughly 30% of the existing stock consists of three-bedroom properties. This is high for this time of year and may decrease as our borders slowly open to the rest of the world.
One of our four-bedroom homes in Strathmore Park was advertised for $1600 per week and received three enquiries, two groups, and two showings in the past month. After the price was lowered to $1400 per week and the new resident offered $1300 per week, the home was quickly rented. This indicates that potential renters in the market are aware of the current state of the rental market, and you may need to be prepared for negotiations to find a resident as soon as possible. Recently, we have received a few enquiries from foreign renters considering moving to Wellington; these enquiries are primarily from families in South Africa, Australia, the United Kingdom, and Canada.
While there were significant regional variations in the number of rental properties listed on Trade Me Property last month, interest from prospective tenants was more uniform, with all regions apart from Canterbury and Southland recording a drop in demand from prospective tenants, as measured by email enquires made regarding specific properties. I emphasised in a few earlier posts how crucial it is to market your home to the greatest possible degree in order to make it stand out from the competition among rentals on the market. This is a tried and true strategy, and it is now more crucial than ever to deal with Wellington’s rapidly increasing rental stock. One significant trend we’ve noticed is that more and more potential tenants are heavily relying on the 3D tour to determine whether they’re ready to enquire and, ultimately, apply.
As more people from abroad enter the country on working holiday visas, we anticipate a steady decline in the number of current listings and an increase in demand. According to the Ministry of Business Innovation and Employment’s most recent statistics, 5682 working holiday visas were approved in June, up from 2862 in May and 2331 in April. We predict better uptake of vacant rentals as a result of the anticipated increase in foreign migration during the upcoming year, particularly in the central city region where the supply of 1-2-bedroom houses is abundant and the pace of demand is slow.
If you are having any difficulty at all managing your rental property or portfolio, or if you are just after some assistance or advice, please do not hesitate to touch base.
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.