While tenants in most parts of New Zealand are experiencing rental increases, rental rates in Christchurch are on the decline. This trend, which we have observed and commented on during the past year, was confirmed in an article about nationwide rental rates published on Stuff.co.nz recently. In just 12 months, the weekly rent average for the properties we manage has decreased from $458 per week to $449 per week.
While a decrease was inevitable as the Christchurch rental market returns to normal after the earthquakes, many landlords feel shaken by the effect it is having on their bottom line. In today’s article, we discuss how supply and demand have influenced rental rates in Christchurch and give you some tips for coping with these changes.
After the earthquakes, Christchurch experienced a drastic housing shortage. Many homeowners were forced to temporarily move out of their homes while repairs were being made or permanently if the home was condemned. The majority of these people needed short-term rental accommodation while waiting for repairs to be finished or looking to buy a new home. In addition, skilled workers were recruited from other parts of New Zealand and abroad to assist with the rebuild. These new arrivals also required temporary accommodation. Suddenly, all available rentals were snapped up and those remaining were quick to increase weekly rental rates.
For the next several years, landlords enjoyed high occupancy rates and were able to charge top rates for their properties. By mid-2015, however, most families were back in their original homes or had moved into new homes. As the rebuild slowed, Christchurch’s temporary workforce slowly began seeking work elsewhere. Consequently, the demand for rental properties slowed dramatically. For the first time in many years, we’re seeing properties stand vacant for longer periods of time.
Once again, Christchurch is experiencing a sudden change in rental occupancy rates as many rental properties sit empty. With demand slowing, there is no appetite for high rental rates. To keep their properties occupied, landlords are lowering rents and offering incentives to prospective tenants.
Thanks to our many years of experience in the Christchurch rental market, we are well positioned to offer advice to landlords who may be suffering from the downturn in our local rental market. Here are some of the things you can do to ensure your property remains occupied:
Ask for help. If your rental property is no longer providing you with a good return, it might be time to call in the experts. A mortgage broker may be able to help you find a better interest rate or identify other strategies to lower your weekly costs. These measures might be enough to compensate for lower weekly rents and help you maintain profitability.
If your property has been sitting empty for more than few weeks, we encourage you to request an appraisal from us. Our appraisal process will help you understand how much rent you can expect to receive from your rental property. If you choose to work with us, we will advise you on changes any changes that could be made to help attract good tenants. To learn more about our services, please call us today on (03) 343 3206.