Low interest Rates Won't Keep Rents Low
2015-12-17
Interest rates might be sinking but council rates are rising and that could drive rents up.
The latest Crockers Property Investment Index found about a third of landlords and investors believe rents are currently below a fair price.
Mortgage money has become cheaper but rates continue to rise and many owners might seek to pass those escalating costs onto tenants, Crockers indicated.
"A number of factors come into play when considering rental increases. An increase in local rates is the most likely to lead to an increase in rents (72 per cent, up 8 points), but other costs like insurance and property maintenance also play a part," Crockers said.
"Compared to the previous survey in July 2014, significantly fewer respondents are saying an increase in interest rates would influence them to increase the rent on their investment property," Crockers said.
"Nearly half are not planning to increase rents within the next six months, while 42 per cent anticipate an increase of 3 per cent or more. Increases in costs associated with the rental property - rates, insurance and maintenance, are all likely to contribute to a decision to increase rents. An increase in interest rates is also another key factor," Crockers said.
The survey results have been released in the same week that it was revealed the cost of renting a typical Auckland home has surpassed $500/week for the first time, according to Trade Me Property data. Analysis of median asking rents showed the new high in November.
Crockers said Auckland two-bedroom rents returned to the August peak of $446/week this month, while two-bedroom rents across New Zealand increased to its highest level at $370/week, Crockers said.
Rents for three-bedroom Auckland places dropped to $570 after peaking at $580 in August. Prices for three-bedroom properties across New Zealand remained relatively stable at $430/week.
Landlords who bought recently make less money on their houses due to escalating property prices.
"Average rental returns on the median sales price in Auckland has slowly trended downwards since June 2013 as property prices rose faster than rents. Over the past twelve months, our estimated average return for Auckland properties is 3.60 per cent, down from 4.01 per cent in October 2014. Of course, these returns calculations do not incorporate increases in capital value," Crockers said.
source: http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=11562145
The latest Crockers Property Investment Index found about a third of landlords and investors believe rents are currently below a fair price.
Mortgage money has become cheaper but rates continue to rise and many owners might seek to pass those escalating costs onto tenants, Crockers indicated.
"A number of factors come into play when considering rental increases. An increase in local rates is the most likely to lead to an increase in rents (72 per cent, up 8 points), but other costs like insurance and property maintenance also play a part," Crockers said.
"Compared to the previous survey in July 2014, significantly fewer respondents are saying an increase in interest rates would influence them to increase the rent on their investment property," Crockers said.
"Nearly half are not planning to increase rents within the next six months, while 42 per cent anticipate an increase of 3 per cent or more. Increases in costs associated with the rental property - rates, insurance and maintenance, are all likely to contribute to a decision to increase rents. An increase in interest rates is also another key factor," Crockers said.
The survey results have been released in the same week that it was revealed the cost of renting a typical Auckland home has surpassed $500/week for the first time, according to Trade Me Property data. Analysis of median asking rents showed the new high in November.
Crockers said Auckland two-bedroom rents returned to the August peak of $446/week this month, while two-bedroom rents across New Zealand increased to its highest level at $370/week, Crockers said.
Rents for three-bedroom Auckland places dropped to $570 after peaking at $580 in August. Prices for three-bedroom properties across New Zealand remained relatively stable at $430/week.
Landlords who bought recently make less money on their houses due to escalating property prices.
"Average rental returns on the median sales price in Auckland has slowly trended downwards since June 2013 as property prices rose faster than rents. Over the past twelve months, our estimated average return for Auckland properties is 3.60 per cent, down from 4.01 per cent in October 2014. Of course, these returns calculations do not incorporate increases in capital value," Crockers said.
source: http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=11562145
- *E-mail：
- *Cel：
- *Password：
