Rents Barely Rising

Thursday 24 July, 2008

The Consumers Price Index released this week by Statistics New Zealand shows that on average rents around New Zealand rose by just 0.7% during the June quarter. This followed an average rise of 1.1% in the March quarter and shows that although there is evidence of many landlords recently achieving increases of 5% to 25% in rents the flood of property being placed on the market to rent rather than sell is clearly depressing rents levels now.

Key Forecasts

• Dwelling consent numbers to fall from 24,500 in the year to March 2008 to below 18,000 in the year to March 2009 with a slight recovery to March 2010 then above average activity after that as attention turns to a shortage of dwellings late in 2009.
• Real estate sales falling from 77,130 in the year to April 2008 to between 55,000 and 65,000 come the end of this year then recovering back over 65,000 in calendar 2009 with further growth over 2010.
• House prices down 5%-10% by the end of 2008, flat over 2009, rising slightly over 2010, possibly earlier.

Source: Tony Alexander, Chief Economist of the Bank of New Zealand.