Rent Increases Likely on Back of House Price Blow Out
July 10, 2015 at 12:00 PM
Tenants are unlikely to avoid rental price increases in Auckland, following in the footsteps of rapidly rising house prices.
The cost of renting in Auckland has increased to nearly $500 a week, and seems set to continue though experts disagree as to whether it will follow the trajectory of the heated housing market.
Head of Trade Me Property Nigel Jeffries, has said that Auckland rents have bucked the national trend and were following the city's exponential rise in house prices. Numbers released by Trade Me Property show rents in Auckland have increased by 6.5 per cent in the year to May 2015. Jeffries said Auckland tenants were now paying at least $3500 more than tenants nationwide.
Other property commentators have said that while they expected rents to keep rising, Auckland house prices had risen by 15 per cent a year, a rate which rents were unlikely to match.
Rising rents in Auckland are being put down to immigration with new arrivals renting at least initially, people who cannot yet afford to buy and are renting for longer, and a shrinking rental supply. Certain suburbs like Ponsonby which might have traditionally had a lot of flats are now becoming largely owner-occupied. Another reason for rising rents in Auckland might be to partially or fully cover next year's hefty rates increases.
At Wendell Property Management in Auckland, we view investment property as a long term game. Small changes now can add up to significantly improved returns in the long term. An annual rent increase is necessary to keep your Auckland property in line with inflation and meet the increasing costs to property ownership - let our professional Auckland property management team assist you with setting the budgets to ensure you're maximising the potential value in your property and minimising vacancies.