The Unconditional Blog

The impartial voice of the industry

 
10

Home owners opt to rent out properties that are struggling to find buyers

Posted on: July 8th, 2008 | Filed in Renting

With the level of property sales already down 44% at just 25,500 properties in the first 5 months of the year – and stock of property on the market at record levels, it comes as no surprise that the level of rental properties on the market is also growing.

In fact over the past 3 months as the levels of new properties coming onto the market has begun to decline and the overall stock of properties has also begun to decline, so the level of stock of rental properties has risen. The graph below shows the statistics of properties listings on realestate.co.nz through the first half of 2008.

Rental listings vs property for sale on realestate.co.nz Jul 08

The blue shaded area represents the stock of rental properties – growing sharply from a steady 4,000 in the first 3 months to then spike up to the current level of over 6,000 this month. At the same time the red columns representing properties for sale as measured on the left hand axis shows the decline from April, down from 61,700 to just under 60,000 this month – not a massive decline, but a decline all the same.

As a note it is important to note that rental properties on this website tend to reflect a high turnover as the timeline of renting is on average so much shorter than selling properties, however looking back over the past 24 months – no other period has seen such a fluctation in stock.

Additionally it is clear that it is difficult to directly correlate the circumstance of properties once marketed for sale being alternatively offered for rental, however the feedback from within the industry and other articles definitely point in this direction.

Ammended content 9th July

At the request of Lance – below is the same data presented for an 18 month period – clearly the stock of rental listings are growing at a rate far ahead of any seasonal influence.

Property for sale and for rent - realestate.co.nz 2007 /2008

Article Discussion

  1. lance says:

    Both seem very seasonal – can we see it versus last year?

  2. Ross says:

    Owners who couldn’t sell their homes due to unrealistic price expectations now seem to have similar inflated ideas as to the amount of rent they will achieve and as a result many of these homes are labouring on the rental market unoccupied. I will not be surprised to see many of them back for sale again in Spring if they haven’t found a tenant by then.

  3. Lance

    Happy to oblige!

  4. Ann says:

    Hi there,

    This stress about prices going up is driving everyone crazy. When do we think the prices will ease and get back to how it was.

    I think if immigration opens up there will be an inflow of quality migrants and hopefully this will ease the siturtion.

    I wish the situation eases sooner than later.

    Cheers,
    Ann

  5. Ann

    Thanks for your comments / questions – I would love to offer you certainty, but as the saying goes the only 2 certainties in life are taxes and death!!

    I guess the best answer is to keep reading this blog as we certainly are attracting some great comments and your participation in the conversation is most welcome

  6. Andrew Burns says:

    Ross, i believe many home owners, rather than being motivated by greed to receive high
    rents, are motivated by need due to the over inflated market they bought in and debt servicing
    costs they now have to live with. I feel really sorry for people who stetched to buy a house in 2007, often listening to advice such as, “if you don’t buy now you will never afford a house in NZ”, are now facing the likelyhood of negative equity, a thirty year mortgage,and rapidly rising cost of living.

  7. Yes, Andrew.. you may have got it right for many of the would-be vendors, now would-be landpersons… who may have thought the boom was to go on and on. And if any anyone was using fear.. “if you don’t buy now you will never afford a house in NZ”, as a closer.. WOW ! they better watch out now!!
    This is the fourth cycle I have seen and I think this time it will pan out a little differently because there are several unprecedented major factors kicking in .. (viz. that have not presented themselves in previous quieter times…) such that I think we will see a major shake up of methods, means and practice that will significantly impact the business.
    For the agencies and salespersons who are well positioned and doing the right work.. life will go on.. but I think differently.

  8. shan says:

    which factors are you alluding to David?

  9. […] of listings of rental property has grown by over 80% over the same period as cited in this earlier blog post to the current levels of 5,700 […]

  10. […] The level of stock of rental listings has grown markedly over the first half of the year, peaking at close to 6,500 listings before falling back slightly over the past few months – potentially a large part of this could have been as a consequence of properties being withdrawn from sale for lack of buyer interest and thereby being placed on the rental market through property managers. This was the subject of a recent post on the Unconditional blog titled “Home owners opt to rent out properties that are struggling to find buyers” […]

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