New Zealand rental demand continues

Investors with property in New Zealand are expecting more doom and gloom when the next set of house prices figures are revealed next week.

With sales already at a 16 year low, record high interest rates eroding demand and real estate agents going out of business, the property market seems to be following the depressing plunge encountered in the UK.

Reserve Bank of New Zealand Governor Alan Bollard has predicted that house prices will fall 7.7% this year and won't start rising again until 2011.

But there is one spark of light - demand for rental accommodation is rocketing. With stalemate in many areas - buyers expecting bargains and sellers unwilling to accept lower prices, more people are choosing to rent.

First National New Zealand General Manager John Stewart said the increase was noticeable across all regions.

'Many sellers are choosing to rent out their properties themselves so the real size of the increase is hard to quantify but the numbers of rentals being advertised have increased markedly,' he said.

Despite the surge of availability, rent prices were not yet dropping consistently as might be expected when more were on the market, Mr Stewart said.

'Multicultural migrants - Asians, South Africans, European nationals, Zimbabweans etc - are propping up pockets of the market in some areas. For example, rents in northern suburbs of Wellington seem to have risen up to 16% in the past three months, and rents in Auckland's eastern suburbs are up about 10%,' he added.

The slump is also having an effect on developers and finance companies in New Zealand. Receivers have been called in to dispose of one of the country's most prestigious golf courses. Gulf Harbour Country Club, which has twice hosted the New Zealand Open, is on the market as a result of the collapse of the Blue Chip group of companies.

The property finance company collapsed earlier this year, taking $80 million of investors' money with it.

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