Shock! Horror! Rents Slump!

It must be “short of news” week with stories like this. My experience at the coal face does not support the notion that rents are falling faster and further. The explanation could be as simple as the fact that more people are listing on TradeMe as its popularity increases. All markets, whether they be rentals, houses, or baked beans do not grow or shrink in straight lines. Prices and demand vary and the result is a jagged line of ups and downs. What is important is the trend over a longer period of time, and 2-3 years would be the minimum in my opinion.  Demand for rentals typically weakens off towards the end of the year and picks up in the new year as people are loathe to shift with all its chaos as the holidays approach. Also better weather makes even the worst rental hovel look good. Just wait until winter comes with its icy winds, soaking clothes, screaming kids,and driving rain. That’s when people make an effort to to find something better.

It has to be admitted that the rush to buy property is tempting renters to stir themselves and make the effort to get on the property ladder before it’s too late. That will only last so long. As property prices rise, those who were to slow or too lazy will give up and continue to remain renters starting the cycle all over again.

I am sure that in a year or two the headlines will be shouting that rentals are in short supply again . I have seen this over and again and the story never seems to change.

Rent falls tipped as demand slumps
By Abby Gillies
Monday Jan 14, 2013

Renters could be in luck, as a turnaround in the market has seen a flood of listings and brought prices to a standstill including in some of the country’s most desirable suburbs.

Supply is outstripping demand for houses and apartments in almost all regions, according to Trade Me Property figures for October to December last year.

The number of available listings has risen eight per cent year-on-year, led by double digit growth in Manukau, North Shore, Wellington, and Hamilton.

In Auckland, supply is up eight per cent, while demand dropped 18 per cent compared to the same time the previous year.

Some of the city’s most popular areas saw the most movement, with supply up two per cent and demand down 28 per cent in the CBD. Mt Eden supply was up 24 per cent and demand down 22 per cent, and supply in Remuera rose 21 per cent while demand dropped 17 per cent.

The figures were a turnaround from the previous year, Trade Me head of property Brendon Skipper said.

“In terms of supply, absolutely. If you take out Christchurch, demand has fallen away a little bit so there is a bit of a change of how people are in that rental market space,” he said.

The market could be the result of renters moving into the home ownership market and possibly people were staying put in their rentals longer than usual, said Skipper.

Link:

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10859004

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