Rents outstrip house-price rises

Last updated 11:46 21/10/2012

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The housing shortage is still putting pressure on rents in Christchurch, as LIZ McDONALD reports.

While house prices have risen in Christchurch by an average of about 6.5 per cent in the past year, rents have risen by twice that amount.

The median (mid-point) weekly rent in the city is now $344, around 12 per cent up on a year ago, as demand exceeds supply.

According to Business, Innovation and Employment Ministry figures compiled by the Real Estate Institute, the rent rises vary widely from suburb to suburb, with three-bedroom homes in some places $30 to $45 a week dearer than a year ago. The figures are based on bonds sent in by landlords.

Rents were also up in Kaiapoi and Rangiora, but steady in Ashburton and Timaru.

Even before the earthquakes, the slowdown in construction had created a housing shortage in Christchurch, something quake damage and red zoning made much worse.

But of those homes available, several trends have been eating into the rental supply. At one end, a motel-type market has formed, with owners letting properties fully furnished to businesses housing out- of-town workers and to insurance companies for customers getting their homes fixed.

As well, demand from first-home buyers enticed by low interest rates and landlords attracted by rising rents have removed some cheaper homes from the rental pool.

Housing Minister Phil Heatley told a housing forum in Christchurch this week that, while rents had "gone up considerably" in the city compared with other centres, they were still lower than in Auckland and Wellington and sitting at about the national average.

He ruled out the suggestion of increasing accommodation allowances for beneficiaries and low-paid workers, saying the extra cash would only push rents up further.

In response to the region's housing shortage, the Government has boosted Canterbury's portion of its social housing fund to $21 million over three years, a third of the total amount allocated across the whole country.

This taxpayer fund matches money spent on social housing by non-government groups such as charities.

The city's priciest three-bedroom rental homes are in the Merivale- West St Albans area, with a median weekly rent of $485, while the cheapest is $331 in Aranui-Bromley- Bexley.

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- © Fairfax NZ News

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