2 Feb 2017

Rental rises put squeeze on tenants

7:53 am on 2 February 2017

Demand for rental properties in Auckland and Wellington is so high that some people are offering well over the asking rate to secure a house.

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Photo: 123rf.com

With the latest labour market and tenancy figures showing rents in the two cities are rising faster than wage growth, those missing out are not happy.

Rents in Auckland were up 3.3 percent according to the new data, while incomes had only risen 0.5 percent over the past year.

In Wellington rents were up 8.3 percent compared with incomes up just over 1 percent.

Economist and Generation Rent author Shamubeel Eaqub said the biggest increase seen in the main cities in 2016 was definitely in Wellington.

"We haven't seen this kind of increase in rent in Wellington since 2007-2008 when things were very tight there.

"Rents are rising really quite rapidly now ... in Wellington it's becoming really unaffordable. We know that there is a very large transitory population that goes into Wellington at this time of year - new graduates, new students - so there is a very intense demand for rental properties."

A drafting manager at an engineering firm, Lee Axten-Rice, said he had been struggling to find a one-room place in Wellington for a few weeks.

He was not fussy about location in the city because he had a car and a place to park it at work.

However, he said it had been a "nightmare" trying to view properties, for which he had to take time off work.

"I went to one place in Kelburn. It was a one-hour open home and I got there about 20 minutes into it.

"The landlord was there and he had a wad of 80 application forms already filled out by people wanting the apartment. I've heard of people saying that they've offered $50 to $70 [extra] rent a week.

"One guy who was talking to the landlord there said he was willing to pay six months in advance. It works out, with bond, to about $10,000 just to get the place."

He was almost resigned to having to flat with others and would reassess in six months' time when the competition would be not so stiff, he said.

Anna Breeze, a team administrator, had just moved out of a 1-bedroom house in Mt Cook where she and her partner paid $450 rent per week.

When they secured the lease a year and a half ago they had been the only couple who were really interested, but at least 50 people came through over the weekend to view the place - all of them keen on securing the lease, she said.

The landlord even had an offer from people who had not viewed the flat but were willing to pay $500 a week, $35 more than the $465 the landlord was asking for.

Ms Breeze and her partner were planning to go overseas for a few months, and said they feared being unable to find an affordable place on their return.

"Paying what we're paying now is the upper limit of it. And that's living in the city being able to walk to work not needing to pay for transportation. We really couldn't have an enjoyable life if we were paying much more in rent."

She probably would not return to Wellington if the market had not improved and certainly would not look at this time of year, she said.

"I just know in the regions it's a lot cheaper. I'm kind of considering going back to study and hoping that everything slows down a bit in a few years and I might have a chance then."

People were also struggling to keep up with rising rent prices in Auckland.

Event co-ordinator Caitlin Gosling said she had seen people offer more money per week to secure a property, something she could not compete with.

Her group of flatmates had signed up to a short-term lease in October and were now all looking to move together, but she said the market had changed drastically.

She said properties that once cost $650 a week were now up to $1000.

"It's just been so, so difficult. I just think that something needs to be done about it.

"Once rent is secured at a certain price, it's not going to go down even if the price of the property goes down."

Mr Eaqub said housing would be the number one issue in this year's election and the rental market would be the first thing that needs fixing.

"The thing is the last four or five terms of government have failed on housing in every imaginable way. We must make this the number one issue and it is the biggest problem that faces New Zealand society today."

Caitlin Gosling said that if the ratio of rent to income did not improve, she would be unlikely to be able to stay in Auckland in the long term.

"It's kind of depressing that I'm 22 and I live in a house that's worth over $2m. It's just not attainable.

"I just don't really know where we would go from here. What is the option? Definitely not to stay or buy a house in Auckland."

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