Wondering where Wellington’s rental property market is headed? Nick Close leads our Wellington Property Management team, which is responsible for nearly 200 investment properties throughout the region. In this blog, we ask Nick for his opinion on current and future trends for the local rental market.
How would you describe the current Wellington rental market?
Over the last five years or so we’ve seen flat growth in rental returns for Wellington, with most weekly rents not changing during that period. However, in the last few months the market has been starting to move and we’ve encouraged our landlord clients to adjust their rents accordingly. On average we’ve seen most rents on our books increase $20-$30 per week.
What’s contributed to the change?
Based on what we’re seeing in the market, I think there are three key factors driving demand for rental properties:
1. Population growth: Vacancy levels have been very low this year and a significant contributing factor is steady immigration, particularly in the Hutt Valley area.
2. Home owners selling up: We’ve noticed a number of families who have sold their home and made the decision to rent a nicer one, in an area they desire, rather than own in that area and pay the subsequent mortgage.
3. High loan deposit requirements: It seems there are also more people looking to rent at the moment as they don’t have the 20% deposit to purchase a property.
What kinds of properties are tenants looking for?
Most tenants we deal with are professionals who are looking for high quality accommodation. Well-built, contemporary, four-bedroom homes are very attractive to them. For that reason, properties in the new-build subdivisions around Miramar, Johnsonville and Aotea are being rented out very quickly. These kinds of homes are also attracting premiums rents – up to $650 per week in some cases.
What are the big issues for landlords?
Attracting and retaining good tenants is always the biggest concern for landlords. For this reason we’ve seen a lot of interest in our 100% Occupancy Promise over the last few months.
The 100% Occupancy Promise offers new landlord clients total peace-of-mind by guaranteeing that, if their rental property is untenanted or if there are any arrears during the first two years, we’ll make up the rent. We’re able to offer this Promise because our average occupancy rate is 99%.
Where is Wellington’s investment property market headed?
We believe demand for high quality rental properties will remain strong, bolstered in part by immigration numbers.
At the same time, there is evidence that foreign investors view Wellington as an attractive market. By way of example, we were recently made aware of a significant Chinese investment in a large apartment development in central Wellington. That is a long-term investment and a good sign that there is still foreign interest in the local property market.
Looking for a Wellington-based property manager? To learn more about Iron Bridge Property Management and our 100% Occupancy Guarantee, call Nick Close on 021 752 944.