Across New Zealand the rental market is hot. In many main cities the homes will be viewed for a limited time before securing a tenant. While this seems great for landlords, there are many changes that are affecting both tenants and landlords. Causing the prices of rentals to creep up, and putting pressure on both renters and landlords at this time. Some articles have suggested New Zealand is in a rental housing crisis.
As an online marketplace, with rental home listings , Shopless investigates the rental housing crisis and the effect it is having on New Zealand.
The Rental Market Responding to Inflation
A big part of why a lot of tenants are struggling to save or meet the current rental rates is inflation. In 2021 inflation had risen by 5.9%,a record high percentage increase, yet the average wage in NZ has remained almost the same for 2 years. This has caused an increase of all living costs to those renting. The rental rates have risen further in response to current inflation and other factors. As of March 2022 the national median for rent had increased by $45 in 7 months. With the Wellington region jumping the highest by 12%. Other areas such as the Bay of Plenty and Northland saw record jumps in their median rental prices.
Increasing Mortgage Rates and Property Prices
For ‘mum and dad’ investors who have one or two investment properties, the increase in mortgage rates and current rules around investment properties may put the pressure on. Forcing an increase in the price of rentals overall. For investors that have one or several mortgages on their properties, the interest rate rise restricts their income and profit above those mortgage expenses. Including taxes etc. One Stuff article pointed out that many landlords of one or two properties prefer to charge a lower rate for long term and excellent tenants. However the interest rates put a strain on their ability to do so.
Additionally the increased property prices also makes it more difficult for these property owners to want to keep their property and charge a feasible rent. This is because as the property valuations in areas increase so does the rates in that area. A further hit to renters and landlords across NZ. With Deloitte stating that the increased interest rates and property valuations, could result in many landlords losing their rental properties.
Those Needing a Rental Exceeds those Buying a Home
This problem has been an issue pre-covid. However for those looking for a rental it has become more obvious due to the peaks and troughs of rental advertisements. Caused by lockdowns. A scoop article stated this: “The current crisis stems from the fact that the number of people living on rent has quickly outpaced those with homeownership. Once this imbalance is created, rental housing becomes inaccessible and gravely botched for those who can secure it.”
There have been many cases of neglectful living conditions.
Because the demand for rentals is high, many potential renters are settling for homes that do not fit with rental regulations. Online marketplaces such as Shopless put in an effort to ensure that listings on our site are of regulatory standards. However there are circumstances on other platforms where landlords have flouted the rules. Putting potential renters at risk with their health and safety conditions. As demand for rentals are high some potential renters will sign up before viewing a home. Or confirm with a brief viewing, and discover substandard conditions upon moving in.
Pressure on Emergency Housing
With difficulty finding rentals in some areas this also has put a pressure on emergency housing. This is often because by the end of a tenancy the tenant may not have found a home to go into. Or have a waiting list or time gap before their next tenancy begins. As the rental market is in high demand, people seeking emergency housing has also increased. As well as those affected by affordability and inflation seeking emergency housing. In general this pressure on emergency housing has primarily come from the ‘rental crisis’. But affects certain regions and ethnicity groups across New Zealand, more than others.
In conclusion, there are many aspects that are attributing to a rental house crisis in New Zealand. Putting pressure on both renters and landlords. And generally having an impact on people’s living conditions. This does not mean that there are no rentals available, but means if you are looking for a rental property to be both careful in committing as well as intentional about viewing and showing your interest. For rental homes across New Zealand, or to list a rental property make sure to visit Shopless online marketplace today.