Rents On The Way Up

 

Frankly I cannot see the logic in the argument set out below. Rents don’t necessarily rise just because house prices rise. Rents rise because of shortages of rental accommodation although you could argue that rising house prices  push more people into renting.

Whatever the reasons, it’s a fact that rents are rising but still have a long way to go before making residential rentals a profitable business.

Hope of capital growth is the glue that binds people into investing into residential property.  Any politician who threatens interference in this industry by way of capital gains tax or the like, had better realise that such a tax would make any rental crisis much worse for the obvious reason that it would (a) discourage investment in rental property and (b) would raise rents even further as increased costs ( tax included)  would inevitably be passed on to tenants.

Rents up with house boom
Alanah Eriksen
19.10.12

Rents have increased in 28 of 30 Auckland suburbs during the past year. Photo / Brett Phibbs
Landlords are raising rents to capitalise on soaring property prices as they overtake those during the boom five years ago, experts say.

An expert says house prices are back to 2007 levels so landlords are keen to make more money on their investment.

The latest Crockers Property figures show the median rental price for a three-bedroom home in Auckland increased in 28 of 30 suburbs compared with September last year.

The biggest rise was in Epsom, Newmarket and Royal Oak north, which jumped from $517 to $640 or 24 per cent. Many other suburbs saw rents rise by about 5 per cent.

Marketing manager Kim Sinclair said the figures were relative as the company had looked at the number and value of new bonds each month.

Rents fell in only two areas -

Grey Lynn/Westmere area and Takapuna/Milford at 10 per cent and 2 per cent respectively. Both areas still have average rents at the high end of the scale for the city.

link:

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10841421

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