Property editor of the NZ Herald

Rents tipped to spike in next two years: Property Institute

Rents are predicted to spiral. Photo/Doug Sherring
Rents are predicted to spiral. Photo/Doug Sherring

Housing rents have been picked to increase rapidly in the next two years - an issue which will overtake high house prices as a far bigger problem, according to Property Institute chief executive Ashley Church.

"The cost of renting will continue to rise and this will replace the cost of housing as the number one housing issue in 2018," he predicted.

"While it's normal to see rent increases in the period following a property boom, the environment in which they will take place in 2018 will be made worse," he said.

Rents would be pushed up this year by a continuation of high immigration which has meant demand has exceeded supply, he said.

Loan-to-value restrictions have driven investors out of the market and that had taken a toll, he said.

Labour's plans for a capital gains tax would not encourage landlords to begin buying again, further limiting supply, he said.

Ring-fenced tax losses and significant new compliance costs had forced many property investors to increase rents and that was a further influencing factors, he said.

"As a result, we're in for big rent increases in some parts of the country over the next couple of years, with those increases already showing up in the Property Institute regional insights report," Church said.

Data from Barfoot & Thompson showed that from July to September last year, the average Auckland weekly rent rose 4.7 per cent to $542, from $520 during the same period in 2016. Barfoot manages more than 14,000 properties.

Church also predicted house prices would continue to flatten this year, mortgage rates would rise, new Auckland housing construction would only rise slowly and said loan-to-value rules would be further relaxed.

- NZ Herald

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