by
October 29, 2024
The ease of getting a tenant in 2023 is now a distant memory. The number of rentals available in Auckland has continued to grow and grow, with 6320 properties advertised on Trademe yesterday. Demand is down and supply continues to be high. We now have some 81-84% higher supply for 3-4 bedroom properties than 1 year ago, and these are now at record high levels of availability. One bedroom properties have the least increase at ‘only’ 45% more than a year ago. In fact we are now just below the record high availability of 6435 properties seen in May 2022. And while thankfully interest rates have begun to fall, this will take time to flow through to benefit the cash-flow of many investors, while extended vacancies are extremely painful to any landlord at any time.
This situation makes getting good tenants harder, and the need to have good value properties is only more important. Accidental developer landlords have brand new properties available for high rents (but many tenants are aware that if the rental photos are too good then the property may well be on the market in a years time). But even lower cost properties have to be well priced, tidy with few defects, to attract new tenants, as they have lots of other options right now.
On the positive side rents have not slipped by much (probably around 4-5% over the past 6 months) which just wipes out the gains of early 2024, so the real issue is avoiding long vacancies. So if you have a tenant leaving do not necessarily expect to get the same rent. Be prepared to drop the rent a bit. Tenants will be checking comparable properties so it is very important not to overprice your rental. We know it can be can be tough to take a little less rent, but avoiding long expensive vacancies is the key to keeping in the game long term.
So the rule is be very careful about rent increases, best to hold off in many cases and reassess next year. Because....
... this is probably going to get worse. Sigh. Normally we see peaks in property availability in Winter which then eases off in Spring. Last year September and October saw the numbers drop as normal, but not this year. The numbers of properties available have kept increasing through Spring, points to setting new record levels of rental property supply by December in Auckland.
