Auckland landlords are not reaping the benefits of new low interest rates, says the city's biggest real estate agency.
Instead, they are facing higher costs this year.
Kiri Barfoot, director of Barfoot and Thompson, told OneRoof: “The cost of owning [a property] has gone up. Many [homeowners] are now looking at 35 years to pay off [a mortgage], rather than 30-year terms."
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Barfoot said that many landlords are still locked into old borrowing terms and not yet able to take advantage of new low interest rates. They are facing continued pressure to upgrade their properties to meet healthy homes guidelines, as well as absorbing cost increases for rates and insurances and other running costs.
She said that landlords who didn’t put up rents through that period may now “have to play catch-up”.
Her comments come in the wake of Barfoot & Thompson's quarterly rental update, which shows that average weekly rent rose to $589, $9 more a week than in September last year.
In the three months since Auckland's level three lockdown the number of people looking for new rental homes went up 40 percent, pushing up rent prices by nearly two percent as rents were frozen only for existing leases.
“While the usual pace of growth was limited by the Government-mandated rent freeze, new tenancy agreements nudged Auckland’s weekly rent upwards," she said.
“Across the city around 150 more homes, or nearly 40 percent more properties, were let during September alone,”
She said that the average new tenancy was now $601 per week, an annual increase of 1.79 percent. That figure is well down on the typical three percent increases seen before lockdown and the six-month rental freeze.
However, Barfoot said that as properties had gone up in value some landlords were in a position to add new purchases to their portfolio. She estimates that when rental properties are put on the market, about 30 percent go to other landlords, the rest to first home buyers. She anticipates that even the inner city apartment market will pick up.
“With ex-pats coming home, the supply is still less than demand. In the city it’s pretty obvious that tourists and students declined, but it will come back," Barfoot said.
“People will have to live somewhere and will choose an apartment because it is more modern, it’s warmer, there may be a pool thrown in, there are no transport costs.
“Even if you asked me five years ago, I would have said ‘I don’t think so’ to the move to apartments. But as a nation we’re getting our heads around. If you’re used to living that way overseas, and you don’t have to mow the lawns.”
Barfoot said that Auckland hotspots included Rodney/Albany area where there is a big demand for brand new homes to rent – and landlords are meeting that need, buying places to immediately rent out. At the other end of the scale, demand is growing for one- and two-bedroom smaller homes for couples and singles as the population changes to smaller households.
