The continuing shortage of rental property drove rents up in every part of NZ in May.
“Stock is battling to keep up with this growing demand and we saw a 6.7% decrease in rental properties coming on to the market in May.”
“This means landlords can continue to demand top dollar for their rentals” Nigel Jeffries, Trademe’s head of property says.
From my perspective as a developer/builder, it’s no surprise the shortage of rentals is causing such rental increases. We have 14 projects underway across Hamilton at the moment and every time we start a new project it costs more and takes longer to complete. Nothing is being done to make it easier or more cost effective to build, in fact it’s the opposite. Development contributions have increased substantially for our medium and high density housing as Hamilton City Council wants to take a bigger slice of the pie. New regulations around earthquakes and possible liquefaction are making a huge impact on costs with one of Hamilton sites now requiring 18 metre piles to secure a simple 2-storey building. Think about how high 18 metres is. To get an 18 metre pile someone goes into the forest and selects the appropriate tree. The cost per pile is horrendous. We’ve been quoted $200,000 for piling a 170m2 floor. We built across the road about 5 years ago and we could use 5 metre piles, the standards just keep on going up.
I’m very concerned about the rising costs. Central and location government don’t seem to care at all about the effects of their constant stream of new regulations and how much they drive up the cost of housing. Instead of working with the development community to bring down the cost of housing, they keep driving the cost up. Yes, usually it’s for a seemingly ‘good reason’ like health and safety, or earthquake strengthening etc.. but where does it stop? NZ houses are now being built to a Gold Standard, but most people only earn a Silver or Bronze salary. Maybe it’s time to stop adding more red tape and to start looking at how to make it easier for builders and developers to provide more housing so more people can get into their own home.
One thing I shouldn’t forget. Those people who already own a property are doing very well. If you are a landlord your rents are rising and will continue to rise. House values outside of Auckland are still grinding higher and interest rates are falling. Immigration is still strong. Buying a rental property today still makes a lot of sense.
We’ve got two new developments coming up. In one we’ll be building 2-bedroom, fully furnished townhouses from $499,000. The other development is 4-bedroom houses in a fantastic location between the Hamilton CBD and Waikato Hospital yielding over 7%.
Call Ellen or me to find out more on 07 823 2525 or register on our website to get new releases www.assuredproperty.co.nz
Click on this link to read the full article with Nigel Jeffries’ insights;