A declining affordability of housing, especially for first time home buyers, is resulting in an increasing demand for quality rental properties in the New Zealand market. Those leaving home who traditionally were searching to purchase their first property are delaying the process. Research conducted by BRANZ illustrates that rental accommodation, as a result, is now an integral step in the journey to homeownership. In other circumstances, the reducing affordability of property in New Zealand, along with global pressures of a mobile workforce, is changing attitudes to homeownership, with many adopting the idea of ‘renting for life’. The flexibility of rental properties in an ability to change locations, regionally, nationally and internationally, as well as adjusting to changing circumstances and requirements of housing, is better suited to the pressures faced by the modern working family.
However, the idea of homeownership has been deeply ingrained into the New Zealand culture, with the purchase of a home viewed as a rite of passage to adulthood. Nonetheless, the concept of home has to meet certain criteria, which some of the properties suitable for first home owners, do not satisfy. House proud New Zealanders, who also desire locational preference for schooling zones, have turned in their thousands to the alternative of rentals to satisfy their desire for a home that is modern, comfortable and in their preferred geographical location… which they may not achieve under the current environment of property pricing.
The rising dependence and resultant increase in demand for house rentals in New Zealand, is evident through the latest figures released by the Real Estate Institute. Figures over the past three years have indicated that rental properties have steadily grown in demand. However, recent figures represent an explosion in demand for house rentals, with the number of homes rented in March 2010 swelling to 16,286; just under 10,000 more than rented in February of the same year and 5,000 more than March 2009. The numbers are staggering and indicate a real opportunity for acute investors and commercial property developers alike to take advantage of these trends. Not only are potential tenants demanding cheap and low quality housing, but high quality housing in desired suburbs… and they are willing to pay.
With a high return on investment, the potential to make large capital gains and an increasing demand for house rentals, the time to enter the property market as an investor is now. Even Government agencies in New Zealand are crying out for quality rental properties with specific timelines, which guarantee income for that contract period. This reduces the stress of finding tenants, managing the property and financial security, as Housing New Zealand takes all responsibility, while guaranteeing an income for a minimum 52 week period, for which you receive the agreed amount whether the property is occupied or not. Perhaps not the desired situation for all property investors, but a strong signal in the property marketplace that house rentals in New Zealand are in high demand, and in reaction to declining affordability of homeownership, is set to continue well into the future. If you are thinking of taking advantage of the opportunities that are in the current housing market, contact your trusted and knowledgeable real estate agent today.