Are your fingers on the pulse? Are you charging a fair market price for your property? Do you know what a fair market price is for your property? If you answered no to at least one of these questions, don’t worry. It is that time of the year again where we take stock in the middle of the busy season and have a look at what is going on so that you can prepare your portfolio for maximum performance.
According to many, Wellington is the wild wild west at the moment where tenants are forced to a shoot out between each other on almost every property. 🔫🔫
The perception has been that landlords are taking advantage of the lack of rental stock, but is that reflected in a marked change in the market? Is Wellington still a good place to invest? Don’t panic, we’re here to let you know.
Notoriously, January to March is the busiest time of year for Wellington’s rental market. The prices surge with the interest in properties as students return and annual fixed term leases expire.
This year of course, with Trademe reporting that there is 70% less stock than the same time last year, it could be expected that landlords would capitalise and we would see a large increase in the market. 📈
We took a look at the stats from the REINZ rent review across the Capital, comparing January 2017 to January 2018.
Right across the Wellington region, the market has been under close scrutiny. 🔍
Upper Hutt saw a small increase of just 1.8% across the entire market. Four bedroom properties stayed extremely similar with another small adjustment of 1.3% while three bedrooms rose 4.7% and two bedrooms rose 3.3%. This is not dissimilar to what we would expect for this time of the year as tenants are back on the hunt for a property as their annual lease expires.
Lower Hutt, on the other hand, have received substantially more of an increase. 📈
Two bedrooms rose 15.8% from an average of $326 to $377 per week. However, owners of three bedroom properties saw the biggest increase in the area with an 18.3% change in asking prices from $422 to $500 per week. This supports the fact that listings in the city are down as more tenants look to move to the Hutt to avoid booming rental prices. This in turn has only served in placing more stress on the Hutt markets and seeing an increase across the board. Not only this but the well known fact that three bedrooms are the most popular type of property is confirmed.
Kapiti coast amongst all of the talk of prices increasing thanks to transmission gully was also exposed to a change in market conditions. Tenants of two bedroom properties found themselves paying 7.4% more in January this year as compared to the same month last year. Three bedrooms saw a boom of 12.7% and those looking to rent four bedroom properties were exposed to a 13.5% change in rents comparatively to this time last year. There were changes too for property owners and tenants in Porirua, Johnsonville and Tawa. Across these suburbs, two bedrooms rose 8.4% and three bedrooms 5.2%.
So what for Wellington city then?
The median rent in Wellington rose 7.5% based on the statistics provided by the REINZ rental report for January 2018 based on comparative figures from 2017. The same report determined last year that rents rose 6.8% from January 2016 to January 2017 so it could be argued that this is not a huge hike in price for this time of year. Realistically, it can always be expected that as stock declines there will be increases in the market. It is a matter of supply and demand.
One bedrooms across Brooklyn, Hataitai, Kilbirnie, Island Bay and Miramar rose by 16% while one bedroom properties across Khandallah, Ngaio, Karori and Kelburn rose a staggering 20%. That number is double the 10% price rise for one bedroom properties in central Wellington, although in the month of January 2018 alone, 131 one bedroom apartments were let comparatively to 65 across the rest of Wellington’s city suburbs.
Two bedroom properties across Wellington’s city suburbs grew by 4.4% with the largest increases being seen in Khandallah, Ngaio, Hataitai and Brooklyn where the median rents for two bedroom properties rose by $35.
Three bedroom properties in Wellington city rose a further 12.8% with the median rent for a property such as this now being $660. The average listing price of professional managed properties on the Realestate.co.nz website for central Wellington stood at $573 per week, up 4.2% from the same time in 2017. This however is not a true representation of the market as there are still a considerable number of private landlords not listing through a property manager.
However, the same report stated that across all regions the average listing price through a professional property manager in January of 2017 was $518 which in the same month of 2018 rose to $542. This account for a 5% increase which again confirms that comparatively to the usual seasonal fluctuations, this year has been nothing out of the ordinary.
It is true then that rents have certainly increased. Yet in a city where the number of people increases and the number of available property is decreasing, this is hardly surprising. 🏘️📉
It is simple economics that when the demand goes up and the supply goes down, prices will increase. Landlords however according to reports from the REINZ rental review and Realestate.co.nz have not been taking advantage of this, with the seasonal changes moving a similar amount to every year.
It appears it is simply business as usual. What is true however is that Wellington still requires more rental stock. Interest levels are still high in listings and property owners can find good, reliable and honest tenants quickly.
Tenants are still looking for warm, dry and safe homes and are happy to pay accordingly for them. 💰💰
All in all then, Wellington still looks a strong place to invest and property investors can look to Wellington with confidence that they will be rewarded for their hard work in the Capital city. 🤑
To find out if your property is rented for the right amount, or to know a little more about investing in the capital, feel free to give our Business Development Manager Jack a call on 04 979 6363.
Jack Vale — Business Development Manager