Auckland Vacancy Levels Continue High

Auckland rental market continues to trundle along with an excess of supply over demand although that appears to be coming to an end. Other commentators have hinted there may be a lot of speculative investor activity driving the market, these stats certainly provide support for that thesis. The opposite is true in Wellington, where vacancies are now well under seasonal levels.

The chart below shows seasonal vacancy levels compared to the average of the last 4 years. 2009 was just after the global slump and had exceptionally high vacancy levels. For the last 3 years listings fell to a very tight level in 2011 when we heard of queues for rentals to last year with 10% above the average. From the beginning of this year however, listings grew to over 20% higher than historical levels.

With this many vacancies in Auckland, investors are in for a shock if there place is not better than others. A correction has to be not far away, new investors will not be able to hold out with long vacancy waits.

Wellington market is now below normal levels after dropping from an unexpected high over last summer. Note that this chart shows the difference from normal seasonal levels, so 40% above normal in summer is an exceptionally high number because summer listings are higher than winter. On 9th January, listings in Wellington totalled 2269, the average for the previous 4 years at this time was1533, showing increasing vacancies every summer over the five years.

With listings dropping to 10% last week it will be interesting to see how far it has dropped tomorrow. Anecdotally the market for rentals seems warmer than normal - i.e. for the first time we have a vacancy coming up and it is already under pressure with a candidate wanting it.

Further pressure is also evident with increases in prices starting to show, see my next blog I will post in a few minutes

Jonette 2011