High-end and mid-priced properties in short supply

First National Media Release

Embargoed for use from 0600 Wednesday, October 19, 2011

High-end and mid-priced properties in short supply

There’s a nationwide shortage for high-end and mid-priced properties, but rental prices are stable and vacancy rates are consistent with the previous quarter and a year ago, First National’s quarterly property management survey shows.

The survey, for the three months to mid-October, measures property management vacancy rates, rent rate movement and demand/supply experienced by property managers in the First National network, which covers the length and breadth of New Zealand.

According to 51% of First National survey respondents, there is a good balance between supply and demand. For 41% of respondents, there are not enough available rental properties to meet tenant demand, while 8% of property managers report an oversupply.

The survey shows 45% of respondents nationally say there is a shortage of high-end properties of all sizes, 50% report a shortage of all mid-priced properties, and 29% note a shortage of all lower end properties.

For the same categories, only 4%, 5% and 13% of respondents, respectively, say there is an oversupply of properties.

Two offices report shortages across all properties and price ranges: Ashburton and Waiheke Island.

Alexandra, Cromwell, New Brighton (Christchurch), Glendene, Papakura, Hawera and Motueka report a lack of rental properties across the majority of price ranges and number of bedrooms.

The survey shows a good balance between supply and demand across the majority of price ranges and number of bedrooms in Ilam (Christchurch), Epsom, Johnsonville, Palmerston North, Mangawhai, Whangarei, Nelson, Blenheim and Te Puke.

First National Group General Manager John Stewart says, “As a generalisation, there is real pressure on good property no matter where and or what size. Quality is in demand and in the main not prevalent enough.”

While pressure in southern centres is, to a noted degree, driven by displaced or moving Christchurch families, the pressure in Auckland seems to reflect the movement of job seekers from regional and rural centres more than, say, the Rugby World Cup, Stewart says.

“Our offices in rural centres alongside burgeoning farming areas noted fewer vacancies, while areas where vacancies are high were typically regional centres where employment prospects are low and the towns service extensive pastoralism, which doesn’t require a large workforce.”

The national average vacancy rate for First National properties under management is 7%, the same as the rate in mid-July 2011 and also consistent with 7% in mid-October 2010, the survey shows.

The lowest vacancy rates are in Papakura, Howick, Palmerston North, Motueka, Nelson and Ilam (Christchurch), which all report 2% or lower.

The highest vacancy rates are in Cromwell (17%), Mangawhai (13%), Taumaranui (13%), and Waihi Beach (49%). The high level vacancy rate in Waihi Beach can be attributed to a large proportion of properties under management being holiday lets and it is currently the off season for holiday rentals.

For the majority of First National offices, the survey shows rental prices are stable compared with a year earlier for two, three and four-bedroom properties.

However, many rents have increased, particularly for three-bedroom homes.

For 47% of First National respondents, two-bedroom rental rates are the same as a year earlier, while 44% say prices are up and 9% report they are down.

The survey shows 47% of respondents say three-bedroom rental rates are the same as a year ago and another 47% say prices are higher, while 6% report they are down.

Considering four-bedroom houses, 52% of respondents say rental rates are the same when comparing July-September with the same period last year, while 42% note they are up and 6.5% say they are down.

Rental rates are up across the board in Ashburton, Ilam (Christchurch), Epsom, Glendene, Waiheke Island, Palmerston North, Nelson, Taupo, Bethlehem and Whangamata, the First National offices report.

In the Central Otago region, Cromwell and Alexandra First National offices report that three-bedroom property prices are down, while much further north Cambridge and Waihi Beach both say two-bedroom rent rates are down.

Ends

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