Rents are rising in Auckland as landlords try to recoup higher costs, real estate agent Barfoot and Thompson says.The biggest real estate agency in Auckland said its average weekly rental reached a new all-time high, increasing by $5 to $408, in July.This
Rents are rising in Auckland as landlords try to recoup higher costs, real estate agent Barfoot and Thompson says.
The biggest real estate agency in Auckland said its average weekly rental reached a new all-time high, increasing by $5 to $408, in July.
This is $20 a week higher than the average for July last year, which at $388 was the average weekly rent throughout 2009 and 2008.
"Average rents have definitely increased since the start of the year," said managing director Peter Thompson.
"Landlords are facing higher operating costs and this is leading to rents going up."
July is always an active month for new rentals, and the company rented out 775 properties this July, up 12.3% on June's number, but in line with the rentals achieved in July last year.
The government moved in this year's budget to deny depreciation deductions for buildings, such as rental housing and office buildings with a useful life of 50 years or more.
The move, which takes effect from April 1, 2011, is designed to help rebalance the economy toward productive investment and reduce the incentive for people to buy rental property purely for tax reasons.
Treasury estimated rents could rise by 1.5%t over three to four years because of the change.
GoldmanSachs JBWere economist Philip Borkin said it was unclear at this stage if the rent increases were a response to the tax changes.
"However, we view a gradual recovery in rents, at a time of limited house price growth, as improving some of the key fundamentals within the property market," he said.
Barfoot and Thompson said the Auckland property market was continuing to tick over.
It sold 644 properties in July, down 17.3 percent on July last year. The average price edged up 2.2 percent to $534,389 from June.
The increase in average price is due to a higher than usual number of homes selling at more than $750,000 in July.
"For the past few months turnover and average prices have moved in a tight band," said Mr Thompson.
"Properties are continuing to sell, particularly if they are priced to meet the market, while there is a steady stream of new listings giving buyers a good level of choice."
Mr Borkin said the housing market remained stuck in neutral.
"Modest house price falls do seem likely. However, we do not envisage a sharp correction lower as this would, in our eyes, require a large increase in forced sales.
"Without a further deterioration in the labour market, this seems unlikely," Mr Borkin said.
