What are the driving forces behind the current extremely tight rental market in Wellington at the moment? Why are rents going up so fast?
I’m meeting tenants at viewings every week who tell me there’s nothing available out there. Stocks have never been so low as they are right now, and there’s pretty slim pickings on Trade Me.
What’s going on out there?
Here’s my tuppence worth:
- The Reserve Bank’s 40% LVR has successfully suppressed the investor market – there are not many new investors buying properties, and seasoned investors are struggling to raise that ratio of capital
- Baby Boomers are cashing up as sale prices are very high
- The Banks are currently very reluctant to lend
- Mortgage rates are at an all time low so tenants are buying their first homes, and in many cases they are buying ex-rentals from the Baby Boomers
- General uncertainty about the Government in the lead up to the election, and probably for the next three years while Labour and NZ First release their new policies
Here’s what to look out for
- MBIE’s crack team of inspectors auditing the huge number of “property management” companies that are not compliant with their systems and processes
- Smoke Alarm legislation changes
- Insulation legislation changes
- Asbestos reporting requirements
- Changes to the Residential Tenancies Act
- Health & Safety law changes and how those will affect private Landlords
- Wellington City Council and their flawed and wholly unsuccessful Rental WoF
- The Meth Testing bandwagon which is running away with itself
I predict that rents will continue to rise in Wellington, albeit slowly and steadily. Legislative changes to the way tenancies operate will actually contribute to those rises, and the need for property management to be regulated to professional standards will be in the spotlight in the next few years, so be prepared!
managemyproperty is an independent Property Management company based in Wellington, NZ
Richard Horne remains a tireless and energetic investor and commentator, running an experienced eye over the property market and trying his best to explain the eternal vagaries of it all!