#MARKETUPDATE

In the current Wellington rental market, properties are receiving hundreds, if not thousands of enquiries. Many students are claiming that landlords are increasing the rent due to the extra $50 increase in student allowances. For some landlords – this may be true, but overall it is simply being put down to high demand and lack of supply, as well as the increasing costs of property investment. So, what is going on in Wellington?

Exhausted supply
Last year, when the story broke about people queuing down the street from property viewings – we were all shocked at how the market had changed drastically. Now this seems to be the norm, with rental hunters arriving to flat viewings with at least 40 other people. Not only has there been a drop in available homes, the median rent in Wellington has increased by $30, from $450 (December/January, 16/17) to $480 (December/January, 17/18). Nigel Jeffrie (Head of Trade Me Property) said the demand in Wellington was "massive", with the number of available rentals dropping 70 per cent on December 2016, and as we head into February we are still seeing the effects.

How about the students?
There have been some cases where the boost in student allowances has resulted in a few landlords increasing rents. This is definitely not okay, and if you have been told, or suspect that this is the reason for your rent increase, you can go to the tenancy tribunal, as landlords cannot charge significantly above ‘market rent’.

As well as increased prices, we are seeing more and more over-filled viewings, as new and returning students arrive in Wellington for the start of the first semester. Since we are a student city, Labour’s ‘first year free’ policy will see increased registrations into tertiary study, which can only mean additional students adding to this demand.

The lack of affordable available housing in Wellington is beginning to negatively impact the Capital, with students being put-off studying in Wellington, primarily due to the lack of affordable accommodation.

In fact, some students have even changed their choice of University, and Christchurch seems to have drawn Wellington students with their cheaper housing options close to campus. Nearing the end of the enrolments process for 2018, the University of Canterbury had 10 percent more Wellington-based students than last year.

Solutions needed
Obviously, there is a supply/demand problem with our housing in Wellington. Not only are we not building enough affordable living situations, but it is becoming increasingly expensive and difficult to maintain a rental property. New legislations such as the Healthy Homes Guarantee Act, have been leading investors to sell up, rather than face the costs of providing a healthy, warm, and affordable home.

As Wellington’s population grows, there will be a continued strain on housing availability. We are truly in the midst of a rental crisis, and all we seem to do is talk about it. We need to take action by building more houses and actually asking how we can create more stock and incentivise improved living conditions.

 
Nick Phillips