In this update, Justine Atkinson, Aspire‘s new Lettings Manager, highlights the challenging rental market across Auckland.
I’m Justine Atkinson, Aspire Property Management’s new Lettings Manager, and I’m also Mike Atkinson’s sister. I’ve been with the business since March, as Aspire Property Management identified a need to have specialist people focussing on the lettings process. It’s a time when your property needs extra attention and it’s important to rent your property efficiently and to the right tenants. I work in conjunction with your Property Manager and our Lettings Agent, Sam Hewetson, to ensure your property is being put to market in the best possible way and rented to the best possible tenants. I have over 20 years’ of corporate marketing experience, and I’m a residential property investor myself, so I’ll be using my skills to get the best results for you!
Now a bit about the rental market and how the future is looking…
The rental market remains challenging for landlords in Auckland, especially those with properties in the CBD and surrounding suburbs. In general, properties are taking longer than usual to rent, and they are renting for less than they have over the last 2 years. Hamilton and Tauranga rental markets are still performing well, with a healthy selection of tenants vying for limited rental properties.
Why?
Statistics NZ has just released net migration figures for the year ending the 30th of June 2022….a net loss of 11,500 people. Which perhaps doesn’t sound that bad until you juxtapose it with the figures for the year ending June 2020, which was a net gain of 74,500. That is a staggering change, and one of the reasons why the rental market has changed.
Find the full Stats NZ article here: www.stats.govt.nz/news/net-migration-loss-continues/
Another reason why the rental market is challenging is the housing market is still shaky. Interest rates are rising, houses are failing to sell, so many are being turned into rentals. It’s hard to pick what will happen next, but in the meantime, it’s contributing to the increasing rental stock. House prices are now back where they were in May 2021, so many sellers are reluctant to sell and realise those losses.
What’s happening at Aspire Property Management?
We’ve rented 23 properties in June, 22 properties in July and so far 16 in August. We have 24 properties listed to rent. Properties are still renting, but the rent must be at market rent. The most challenging ones to get rented are Auckland inner-city apartments and townhouses on the Auckland inner-city fringes. The average time for an Auckland property to be on the market is 25.7 days (June – August) and Hamilton and Tauranga (June – August) is 11.8 days.
We are finding properties that aren’t at market rent are not attracting viewers, so of course, they aren’t being rented. We are doing everything we can to get your property rented, but if you own an inner-city apartment or townhouse, the demand is much lower than in previous years. The international students still aren’t here, and many young professionals have moved overseas. If your property is not advertised at the market rent, then it will not rent. Potential tenants have so many options right now. I’ve screen-shotted an example below that was posted on Facebook on Friday. There are 170 comments and counting, with the general consensus that the market for rentals around the Auckland city centre has changed drastically.
What can we do?
Offer the first 1, 2 or 3 weeks’ rent free.
If you are reluctant to reduce your weekly rental price, then consider offering the first 1, 2, or 3 weeks’ rent free, to a tenant who signs up for 12-months, to entice potential tenants. This can be a good option if you’re not keen to reduce the weekly rent amount on a property that is struggling to rent. This will be advertised on your TradeMe listing. Please discuss this option with your Property Manager if you’re keen to try it.
Accept pets.
This is a big one…if you can, offer to take pets. This increases your potential tenant pool by a huge amount!
Renovate.
Many owners took proactive action after Mike sent out the last market update – we’ve made kitchen and bathroom updates at a few properties to make them more attractive to tenants, replaced carpet and tiling, and carried out other minor improvements to some vacant properties, all with the goal of enticing good tenants.
Meet the market.
If you have a property that is not being tenanted easily, then reduce the price. This is the best way to get tenants in, and some income is better than no income! Contact your Property Manager to discuss this, though I’m sure you have already had conversations about it. The lower you can go, the quicker you’ll find tenants.
Keep existing tenants happy.
The goal right now is to hang on to your tenants and consider their requests for improvements seriously, as it’s easier to keep an existing tenant happy than to find a new one in the current market.
When will things improve?
That’s a tough one to answer. Immigration NZ has said that the border reopened to international students and all travellers on the 1st of August. But exactly what that means for net migration remains to be seen. Student visas were able to be applied for on the 31st of July, but how many applied? How many will be approved? And when will they arrive? All yet to be answered. The universities all have communications on their websites encouraging international students to apply for courses commencing in February 2023, so it appears there won’t be many international students gracing our shores until then. I will be watching immigration data closely and will provide any updates. The good news is that Stats NZ is still predicting strong population growth for NZ over the coming years, so the market will recover, and demand for rentals in NZ will be strong again.
Keep in touch.
Reach out to us if you have any questions, and I look forward to working with you!
Kind regards,
Justine Atkinson
Lettings Manager
