An impending oversupply of apartments in Auckland will constrain rents and make it difficult for developers trying to build into a reluctant market.
This article is about the Sydney apartment market, but it applies here too. There are an estimated 7,000 cheap and mid-range apartments coming on stream shortly, most of them in Auckland.
This might explain why rents in Auckland have not risen by the same degree as other parts of the country. The majority of these new apartments will be of dubious quality, and so small that when you smile your cheeks will touch the opposite walls.
We already have thousands of shoddy apartments built during the last boom, but they are diminishing somewhat through rampaging rot and large lumps falling off.
Renters might be happy, but I see much trouble coming for developers trying to build into a reluctant market.
– Olly Newland
An investor-led building boom has almost doubled the size of the Sydney apartment rental market in two years, forcing landlords to drop rents more than $100 a week in some areas to secure tenants, and casting a shadow over the thousands of units still under construction.
The number of flats listed on real estate websites to rent has more than tripled in 15 postcodes, including around Gordon, Miranda, Botany, Sutherland and Homebush. This oversupply has left some areas struggling to find tenants, rental bond data shows.
Real estate agents said landlords were “feeling the pressure” to drop rents rather than have their properties sit vacant for a month. Rental vacancies have doubled in the past two years, according to Domain.com.au.
Sydney is in the grip of an apartment building boom, with 30,880 multi-unit dwellings built last year, a record for any Australian city. There were 16 multi-unit projects finished in the first three months of 2019, adding another 1948 units.
Dick Crampton, director at Shead Property Chatswood, which manages more than 1000 rental properties, said the supply of north shore rentals is at “an all-time high”.
In the last 12 months, I’ve not seen as much supply of rental available by quite a way,” Mr Crampton, who has worked in the industry since 1972, said.
“When properties were totally selling out off the plan about two or three years ago I suspect that probably 80 per cent of them were sold to investors. So I suspect it’s either developers or investors leasing properties now.”
Read the rest here: Sydney Morning Herald