Low interest rates may be prompting an increase in the number of rental properties in Auckland, the latest Department of Building and Housing quarterly report says.
It says the supply of houses for sale in Auckland is low, down almost a third in September compared to mid-2012. But the number of rental listings on Trade Me has increased by 13% to 18% across Auckland in the year ended June 2013.
The report says: “There are several possible explanations for this divergence. One would be that increasing numbers of Aucklanders have left rental accommodation to buy a home, thereby decreasing the stock of houses for sale and increasing the supply of rentals available. Another explanation could be more investors buying formerly owner-occupied houses and converting these into rentals. This would also reduce the stock of houses for sale and increase the supply of rentals. Both types of purchasers are likely to have been driven by historically low mortgage interest rates.”
Auckland’s rent rose 1.1% in the last quarter, against a national average of 1.8% and 4.4% in Greater Christchurch.
Kohimarama East reported a 25.8% year-on-year reduction in average rent over the past year, followed by Epsom South (17.1%) and Epsom North (13.4%). Waitaramoa, Orakei South and Pakuranga Central had the largest year-on-year rental increases in Auckland, of 50.5%, 48.8% and 33.2% respectively.
Rental vacancies have dropped off this year in all regions. One-bedroom properties’ average rent increased 2.4% over the past quarter but most other property sizes remained steady.
The gap between five-bedroom properties’ average rent and four-bedroom properties increased by 14% over the quarter.