State of the Wellington Rental Market

There’s has been some recent media traffic about Wellington rents. The talk is about how listings are less than this time last year and how tenants are feeling the squeeze, trying to find a suitable rental while competing with many parties attending viewings.

In property management, the busiest time of year is January, February and March.  It’s a seasonal variation largely due to tenant movement. Students are coming back to university, people are relocating to Wellington for work and Kiwis returning from overseas or other parts of the country want to reclaim their home. Or it could simply be that some tenants want to move out of their current rental property and find another. 

Our experience at realestate.co.nz (dedicated to listing only professionally managed properties) shows that when comparing last year to this year, there has been a decline in listings but not as dramatically as may be perceived. In December some media reports stated there was a 70 per cent drop in rentals compared to the previous year and predicted that January would be worse.

Our records show that in January 2017 there were 353 professionally managed listings on our site from property managers across Kapiti, Lower Hutt, Upper Hutt, Porirua and Central Wellington. This compares to 260 listings in January 2018 and represents a 27% drop in number of listings. 

The average advertised rent for January 2017 across all regions was $518 per week and this has risen in January 2018 to an average list price of $542 per week.  This accounts for an average list price increase of 5% on average, which appears, compared to previous years, a fairly typical increase.

If each area is compared, the Kapiti Coast in January 2017 had an average list price of $410 per week and currently in January 2018, the average list price is $433 per week; accounting for a average increase of list price by 5.4%.

In 2017 in Lower Hutt, the average list price was $447 per week compared to this year of $473 per week, representing an increase of 5.5%.

In Porirua in 2017, the average list price was $358 per week compared to $431 per week currently, accounting for a 7% increase.

In Central Wellington, the average listing price in 2017 was $555 per week and now stands at $573 per week, representing a 4.2% increase. 

Typically, the middle-of-the-range priced rental homes tend to have the highest demand and it would not be unusual for multiple parties to view a property and for this to generate a multitude of telephone calls or emails to the property manager. 

Smart property management companies use an online booking system such as inspectrealestate.co.nz which has a ‘booking a viewing’ button which prospective tenants can use to choose a time to view the property.  It means the property manager can manage the process, limit the number of attendees and avoid crowds. The viewing is then more meaningful for the tenant as the property manager can answer any questions which are unique to the viewer. 

Higher priced, more executive style rental properties tend to take a little longer to rent as the market is not as extensive. Our experience (from consulting with some our property management colleagues in Wellington) is that some properties are still taking a couple of weeks to rent depending on the location and who is the target market.

However, with a decline in listings, there is evidence of increased competition, with more people applying for properties in this category in January 2018 than the same time last year.    

Some of the fall in listings can be attributed to tenants not moving from their rental properties this year.  If tenants do not move, then the listing does not become available and there is more competition for the listings which are available. Some of those tenants may simply be staying put and looking to buy their first home. 

Our professional property management colleagues who advertise on realestate.co.nz are geared for the compliance that has been legislated over the last couple of years. This includes ensuring that homes are insulated by July 2019 and that smoke alarms have already been installed (July 2016). 

Tenants are keen to rent warmer, safer and drier homes and it is these homes which will generate the most interest when listings become available.  Properties that are well maintained, in a good location (particularly on bus or train routes or walking distance to the central city) attract the most interest. 

Landlords who have their properties professionally managed have property managers that not only keep across compliance requirements but also have a good understanding of the market forces. They increase rents fairly and consistently rather than applying any kind of huge rental price increase from one year to the next.