Christchurch’s Rental Squeeze
1 Oct 2013
Since the major Earthquakes in 2010 and 2011, Christchurch has experienced a shortage in new builds and residential property. Now, however, the city is focused on rebuilding and is expected to play a key role in New Zealand's economy creating more jobs both inside and outside the region. This will only continue to put pressure on the demand the city’s rental properties.
Christchurch’s 9.4% increase in property values for year ending April was the biggest increase outside of the Auckland market. With rental prices seemingly on an even bigger rise, property investors and landlords are set to benefit from the city’s rapid growth going forward.
Increased rents in Christchurch are also influenced by huge increases in insurances and council rates and the cost of much higher building standards since the Christchurch Earthquakes.
HAVE CHCH RENTS REALLY INCREASED 22% IN THE LAST 12 MONTHS?
Trade Me Property has analysed the data on its website from April to June and compared it with the same three months last year. Christchurch rents are 22% higher than a year ago compared with the national increase of 3%. Average rent prices in Christchurch are skewed somewhat by high-cost, short-term rentals to insurance companies who are accommodating insurance claimants, and paying rent more akin to motel prices. Auckland’s average weekly rent was $494, followed by Canterbury at $480 per week and Wellington at $408 per week. The dearest rental in Christchurch City as advertised on Trade Me for end of July 2013 was $1750 per week being a fully furnished four bedroom home in Fendalton and the cheapest being $67 per week for one bedroom in a three bedroom shared house.
Trade Me figures show a quarter of rental properties listed in the major centres Auckland, Wellington, Christchurch are removed within 6 days suggesting strong demand for certain properties.
ARE INVESTORS BUYING RENTAL PROPERTIES?
Latest ASB Investor Confidence Survey results show rental property investment is the option New Zealanders believe offers the best returns. Low interest rates, poor returns and risks attached to other investments and an improving housing market sentiment make investment in rental property a good choice. Therefore it comes as assurance that rental property has taken over the top spot from term deposits for the first time since 2010.
SURELY THE DEMAND FOR RENTALS IS JUST A BLIP ON THE RADAR...
We think the evidence we are seeing and hearing is that it’s probably not a blip and people are thinking this is a good time to get back into rental property. The rebuild will likely take 10 years or more, fuelling demand for housing. Then the cities demographics will have changed, but that’s another article!
We are seeing 3-4 bedroom houses are in hot demand all over Christchurch. Location is still key with Fendalton and Merivale hotspots for rising rent prices. Another great investment opportunity is Rolleston, New Zealand’s fastest growing district.
If you are buying or thinking of buying always do a proper due diligence, get truly independent advice, it does not pay to be over-confident and act recklessly with your money. Work with professionals who are property investors and most important use the opportunities offered by being a member of your local Property Investors Association. We are only too happy to talk over the viability of a prospective or current property being a good investment – contact Claire Wilson or Martin Evans (03) 351 7643.