Costs increasing faster than rental prices
The latest Consumer Institute cost of living survey shows that general costs in providing rental property have increased faster than rental prices. In addition, wage increases were 66% higher than rental price increases.
“Rental property providers have been keeping rental costs down when many of their costs and the price they have to pay for new rental properties is increasing at a faster rate” said NZ Property Investors’ Federation Executive Officer, Andrew King. “It is also pleasing to see that wages are increasing at a faster rate than rental prices which will continue to help tenants with their living costs”.
House prices also increased at a faster rate than rental prices, reducing the return on buying new rental properties and making it more difficult to increase the supply of homes for tenants.
The consumers list shows that four of the top items that increased in price over 2018 were directly related to providing rental homes for tenants.
Home insurance: +15.2%
Vehicle insurance: +7.2%
Local authority rates: +5.1%
Construction costs: +3.6%
Property maintenance: +3.5%
The overall consumers price index increase was 1.9%. However median weekly wages increased by 4%.
Home ownership costs were tenth in the list of issues that respondents were most concerned about. This reflects the fact that home loans to first home buyers have increased from 10% to 17% over the last three years, while property investor loans have fallen from 35% to 17% over the same period.