Rents look like they have peaked, supply shows a small increase and enquiries remain steady...
With daylight savings ended, it sure feels like we are well on our way to the cooler part of the year.
It has been an interesting month across the entire property market and like daylight savings the property clock or cycle has skipped a few hours from what was a bullish market to a definite slow down.
Some of the factors that we traditionally see with a slow down such as stock oversupply and falling construction prices are nowhere on the horizon but the market has shifted to a buyers’ market, that is for sure. The net result will be a greater supply of rentals as those that look to exit the market and realise the gains recently made, will find it harder to achieve the prices they want, so may end up holding onto them. Properties will still change hands but at a slower pace.
We’ve seen some commentary that international investors are increasingly watching New Zealand’s housing market for signs of trouble and as an indicator of things to come, with one Australian financial services firm labelling Auckland the “canary in the coal mine”. More to the point the entire market is feeling the effects of the Reserve Bank’s aggressive steps to fight inflation.
Long-term buy and hold investors know this cycle well, it is very much a keep calm and carry-on scenario. Rents move and adjust with the market, so properties brought well, will stand the test of time.
Rents have peaked…
The Residential Tenancies Act says that rent payable or to become payable for the tenancy shall not exceed the market rent by a substantial amount. Market rent is the amount a landlord might reasonably expect to receive, and a tenant might reasonably expect to pay, for a tenancy. It needs to be similar to the rent charged for similar properties in similar areas.
Over the last 12 months there has been some significant changes to the “market rents “in Christchurch. Some headlines have been” 'A massive shock': Christchurch man's rent goes up $80 a week as supply of city homes drops.” Trademe stats show a modest 9% increase on advertised properties but that does not show those on existing leases that are renewing with increased rent.
We are in the market everyday as a barometer looking for shifts and changes to ensure that we are achieving the best return possible. I have a feeling that for now we have reached the limits of those large increases, as most expiring tenancies have been exposed to the changed market. We continue to monitor and assess market rents and increase them when we are able.
What’s happening in the local market?
From last month, we have seen an increase in supply by 92 properties. Trade Me has 743 properties listed for rent in Christchurch this week, about a third lower than a year ago.
We are still seeing a good level of enquiry for properties that are available. COVID is still very much a feature here and also as it is now getting darker and cooler, we see movers taper off, as enthusiasm for shifting starts to drop in the cooler months.
“Pride and presentation” is the takeaway term for the month. Properties need to be at their very best possible in today’s market. I’m not saying that everything needs to be new but well presented and maintained. We have a great team of tradies that we keep busy, it is amazing what a fresh coat of paint can do to lift a property. I aim for a paint through every four to five years on my places. We can project manage anything from a complete renovation to just the bathroom or a new front fence.
As always, we do truly appreciate your business and the team and I are always just a phone call away. We are always available for a free chat and are happy to share our experience and knowledge wherever we can be helpful.
Warm Regards Hamish and the Team @A1
An active investor for over 25 years & qualified builder, property has always been a part of life. Hamish has sat on the committee of the Canterbury Property Investors Association including two years as President.