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The city of Dunedin has recorded an average weekly rent of $400 or more for three months running, for the first time in 26 years — and those in the real estate field expect it to continue rising.
Ministry for Business, Innovation and Employment statistics show that in October 2018, the average rent was $410, in November it was $415, and in December it was $400.
The numbers are the highest since records began in 1993. The figures are based on data gathered from bonds submitted to Tenancy Services. Otago Property Investors’ Association president Cliff Seque said the rents included all the shared properties that had gone up for rent in the past three months, which included five-, six- and seven-bedroom flats in the student area.
An average five-bedroom student flat cost about $740 per week to rent, Mr Seque said. Traditionally, rents dropped again in January, February and March. The fact the figures were breaking a 26-year record was due to several factors, such as Otago Regional Council rates going up "and all those new and increased compliance costs", Mr Seque said.
"It’s not concerning, it’s just what’s happening in the market," he said.
"There’s no such thing as a free lunch. Somebody has to pay for it at the end of the day."
An interim report from the Mayoral Taskforce for Housing released late last year found there needed to be 650 more social and community units just to meet current demand. This year, the city’s population hit 130,000. Taskforce member Dunedin city councillor Aaron Hawkins said he was hearing anecdotally rental supply was being "squeezed by population growth" and the rise of Airbnb, and some owners were choosing to get out of the market rather than bring their flats up to standard.
"We know our projected demand is for far more one- and two-bedroom units, which the market simply isn’t delivering," he said.
"If we want to make sure that we have enough of the right kinds of flats in Dunedin, and that they’re affordable, then Government needs to become more active in making that happen."
Nidd Realty owner Joe Nidd said the city experiencing population growth was a contributing factor to the tight rental property market, as was people moving to Dunedin.
"We’ve seen this on the horizon for some time.
"The biggest influence we’ve seen is the number of people able to get on to the property ladder," Mr Nidd said.
When combined with increased compliance costs for landlords, the market was a "perfect storm" for people who wanted to rent.
Queenstown recorded the highest weekly rent in the country last December, at $651 per week.