Rents rocket as homes in short supply
Rental rises in Christchurch have surged to an eight and a half-year high as the housing shortage refuses to loosen its grip on the city.
Desperate tenants are taking extreme measures to remain competitive, with some handing flyers to property managers pleading to be given a home during viewings, while others enter bidding wars at rental auctions.
Rents in the central city have increased 21 per cent in the past year and Christchurch's housing shortage is "becoming increasingly critical", Infometrics' 2012 September quarter residential rent report says.
Overall, rents in Christchurch increased 12 per cent from July to September 2011 to the same period this year.
Infometrics' managing director Gareth Kiernan said the city's rental prices had forced national rental inflation up 4.9 per cent.
The earthquakes had left Christchurch with a shortage of affordable housing and Kiernan predicted the issue would be exacerbated as construction workers started flowing in for the rebuild.
Some community leaders believed the figures accurately reflected Christchurch's "housing crisis", while other experts were sceptical.
Salvation Army Major Mike Allwright believed the "rental crisis" had plateaued in the past few months, despite the "alarming" figures.
"There are still people in difficulty but they are not coming forward as much as they once were and I think the figures are making it look worse than it actually is."
Insurance companies wading into the short-term rental market while their clients had quake repairs done on their homes could be skewing the figures, he said.
Harcourts In Total owner Bruce Pyott had "no doubt" the housing shortage was putting pressure on the rental market, but he also believed the figures may appear worse than the reality.
Properties in the $360 to $500 bracket currently "fly out the door", he said, but demand for properties over $600 was substantially lower.
The current rental rises could be a direct result of the "long, flat rental patch" three or four years prior before the quakes and the fact that some landlords had not lifted their rents to market value 12 months ago.
"A considerable part of the recent rent rise could be a part of the market's natural cycle and also reflects increased costs for landlords [such as], insurance, loss of depreciation deductions and rates."
The manager of Horncastle Property Management Michael Skinner said over-inflated rental prices were coming from private landlords rather than property managing firms.
"Some private landlords are trying it on because they can technically get away with it, whereas companies have reputations to uphold and one day the market will drop back down."
The number of Horncastle properties available in Christchurch was the lowest it had ever been and the business was receiving daily calls from desperate tenants, Skinner said.
Of the 800 Christchurch properties Horncastle managed, only nine were available and last week there were only five prospective properties listed on its website.
City councillor Glenn Livingstone believed the figures were an accurate reflection that "the city actually is in a housing crisis" and Tenants' Protection Association manager Helen Gatonyi agreed.
She said she was not surprised by the figures and that TPA had warned the Government more than a year ago the city's rental market would spiral out of control.
Those most affected were single-income families who fell just above the threshold for social housing but could no longer afford to live in the current rental market.
Housing Minister Phil Heatley told The Press he was well aware of the housing challenges in Canterbury.
"That's why we are matching supply with demand, ramping up our response as the need ramps up," he said last night.
Infometrics, an economics forecasting and consulting firm, was basing its figures on data from the Real Estate Institute of New Zealand and bond lodgements from the Business, Innovation and Employment Ministry.
- © Fairfax NZ News
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