Flash rentals push prices up overall

Rents are on the rise in Northland but a property expert says it's mostly executive properties and not standard rentals. Photo / File

Rents are on the rise in Northland, with this month's interest rates hike expected to push them even higher.

But a local property manager says it's a case of tenants having higher expectations, rather than landlords upping their rent.

Data released from the Ministry of Business, Innovation and Employment (MBIE) shows the average weekly rent in Northland rose 1.8 per cent to $249 for the three months to April, compared with the corresponding quarter last year.

The number of new bonds lodged in the region dropped 6 per cent to 1141 year on year, with a total of 12,691 active bonds as of April 30.

The Reserve Bank this week raised the official cash rate (OCR) to 3.25 per cent, putting more pressure on mortgageholders. It was the third hike since March, with the Reserve Bank indicating more were to come.

LJ Hooker Whangarei business manager Grant Murray said local rent rises reflected a rise in the number of people renting country and lifestyle properties for $400 to $600 a week.

"There are a lot of properties like that [where] people, for whatever reason, decide to go to [Australia] or whatever and didn't sell them and are renting them out. So [the rents] are much higher, but you're talking executive properties."

The amount ultimately came down to the presentation and quality of the property, rather than how many bedrooms it had. And better awareness about features like insulation meant tenants had high expectations. "People are very savvy on what they're renting now. They don't just grab the first one they see."

However, the latest interest rates hike would put pressure on landlords, who would need to recover more money, he said.

Nationally the average weekly rent increased 2.5 per cent to almost $265 in the three months to April compared to the corresponding period in 2013, while the number of new bonds lodged rose 1 per cent to 46,419, MBIE figures show.

As of April 30 there were 450,113 active bonds nationwide.

Canterbury continued to have the highest rental growth in the country, jumping close to 13 per cent year on year.

Property Investors Federation president Andrew King said the federation's analysis of MBIE's data showed the median weekly rent had jumped 5.7 per cent nationally to $370 a week - markedly higher than the usual 3-4 per cent annual increase. And the OCR hike could potentially see rents rise further.

"If you've got people who are first-home buyers [rising interest rates] may put them off [buying] a little bit. And if it does, then they may decide to continue renting and save."

That would put pressure on the rental market, ultimately pushing up rents.