The Beginners Guide to Why The Rental Market Will Boom

Reserve Bank lifts interest rate

JAMES WEIR
24/04/2014

The Reserve Bank has lifted its key interest rate to 3 per cent and says it will keep increasing “as needed”, with mortgage rates also set to rise.
Announcing the latest rate hike, the central bank said there had been “some moderation” in the housing market.
Speed limits on low-deposit home loans introduced late last year had eased pressure, it said today.
“And rising interest rates will have a further moderating influence,” governor Graeme Wheeler said.
However, an increase in net migration was adding to housing demand.
The Reserve Bank also warned that the high New Zealand dollar was not “sustainable”.

Link

http://www.stuff.co.nz/business/money/9973708/Reserve-Bank-lifts-interest-rat

Higher immigration = higher demand for rentals = higher rents
Higher interest rates = higher costs = slower building = higher rents
Higher deposits = higher numbers renting = higher rents
higher rents plus higher interest  rates = fewer people able to buy = higher rents.
Steady house prices + higher interest rates = higher rents
Falling house prices = more forced sales = higher demand for rentals = higher rents.

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