by
October 26, 2023
The record lows in Auckland properties available for rent on Trademe continues. But, this year there was no spring dip in the numbers available (perhaps because of the election timing). Also the numbers have climbed slightly higher over the past two weeks (see chart below). Rents continue to steadily increase to new highs. All of this is especially true for 3 bedroom properties where supply is at levels we have not seen since 2014. Part of the story is an 2.8% increase in Auckland's population over the past year, and we are expecting another 7,000 overseas students to arrive in NZ in early 2024, so little chance of demand softening.
When we send out rent increases of $30 or even $35 pw we have had tenants saying how they understand and that it is fair enough. In one case we were about to increase the rent of a long-term tenant by $35, but just prior they gave notice. Now we are about to advertise this unit at $60 pw higher and quite confident we will get new tenants at this level.
Current there are 3520 Auckland properties available for rent on Trademe compared to 5170 a year ago (31.1% lower!). Supply is between 21.1% lower for 4 bedrooms and 36.5% lower for 2 bedroom properties than last year. Rents for our benchmark Glenfield 3 bd have steadied over the past 4 months, averaging $713 at present. Tenant demand became a bit weaker around the election.
We will have a National/ACT government in a few weeks time (perhaps with NZF in as well). We can be confident that the removal of interest deductibility will be reversed, but we don’t yet know how fast. Some of the recent anti-landlord rules introduced by Labour will be going, but the details will matter. Overall the changes will make being a landlord safer, and encourage landlords to invest (especially when interest rates start to decline). With a bit of luck over the next few years we may see the ACT party policy of pet bonds introduced, which will make it easier to support tenants with pets.
We note that some of our clients are bringing forward major renovations with the idea that they will be claiming the repair cost this year. This reduces the likelihood they will be paying tax on the 50% of their interest payments which are non-deductible at present. They are still forking out cash, but on improving their rentals and income rather than on their tax bill. This is quite a forward looking strategy, but does require the landlord to have spare funds available.
