Auckland rents are tumbling as dis-appointed vendors pull their houses off the market and flood the city with flats.
Barfoot & Thompson, the city's largest agency chain, said yesterday that average weekly rates had dropped from $391 in June to $384 last month, a trend it attributed to disappointed vendors. The firm also warned landlords that rising supply has decreased rental returns, making it cheaper for people to rent.
Around 460,000 houses in New Zealand are rented to more than one million tenants and Barfoot manages 8100 Auckland flats, houses and units for 7300 landlords, making it one of the city's largest rental agencies.
It attributed the rent drop to the increase in rental accommodation throughout the city as vendors become landlords in a show of disappointment in the state of the housing market.
Peter Thompson, Barfoot's managing director, said the supply had risen so landlords were dropping rents on places already let by about 5 per cent. This was a response to the market and a move to keep tenants, he said.
"There's certainly an excess number of vacant properties," he said. Vendors, hit by a 50 per cent drop in sales volumes, are finding selling so hard that renting is a more palatable option than quitting their places cheaply.
The trend has resulted in the home owners being termed accidental or reluctant landlords.
"There is a lot of rental stock available and some vendors may be choosing to let their properties rather than sell on the current market, but they need to understand that they may not be able to get as much rent as they had anticipated," Mr Thompson warned.
House prices are also down and Mr Thompson said this showed people selling places were becoming more realistic.
"Vendors who need to sell are gradually adjusting to the market and lowering their expectations," he said.
The average sale price fell from $525,316 in June to $497,479, but the volume of sales rose 13.1 per cent from 556 to 629 deals.
Mr Thompson said while prices had dropped, the average was skewed slightly by a package of 87 apartments going unconditional during the month and reducing the overall average.
Crocker's, another large Auckland residential manager, has also found the city's rents falling lately, in contrast to rents rising nationally.
Three-bedroom rents rose by 6 per cent to a national average of $340 a week from $320 last year, it said this week. The two-bedroom rental market was also stable, recording an average of $280 per week for the fifth consecutive month, but the Auckland average dipped $3 from $338 to $335 per week.
Auckland rental returns fell from last month's high of $445 to $436, Crocker's said.