Here's how natural disasters impact on rental markets – Stuff

Rent rises in areas affected by Cyclone Gabrielle and the Auckland floods are likely, as that has happened in other rental markets after previous natural disasters, experts say.

In Auckland, about 2766 houses have yellow or red stickers on them after being deemed unsafe by the Auckland Council due to flooding events and the cyclone.

In other regions hit hard by Cyclone Gabrielle, the number of properties left uninhabitable is not yet known, but the scale of the devastation suggests many will be affected.

Following Auckland’s floods, Renters United, and 19 other organisations, called for a temporary rent freeze in the region to allow flood stricken tenants to get back on their feet.

READ MORE:
* Call for government to halt ‘looming’ rent increases for flood-stricken Aucklanders
* Auckland rent increases last year among the lowest in a decade
* Rents still rising as supply pressures remain

This was in response to comments from Auckland Property Investors Association president Kristin Sutherland, which suggested the weather-related reduction in rental supply would increase demand, and rents would go up.

There has already been an increase in demand for rental properties in Auckland, and the latest Trade Me rent figures show Auckland’s median weekly rent has gone up to a record high of $630.

But the country has dealt with natural disasters in the past, so here’s how some recent events impacted on rental markets.

Christchurch earthquakes 2010 and 2011

In Christchurch, 7860 homes were left uninhabitable or red zoned after the earthquakes, and a further 9100 needed to be rebuilt or had major damage, according to a 2013 Ministry of Business, Innovation and Employment (MBIE) report.

The large scale loss of housing led to a shortage of rental stock, and a sharp increase in rental demand.

Trade Me Property sales director Gavin Lloyd said rental supply in Christchurch declined continually in the period following the earthquakes, and there was no uptick in the number of rentals until 2013.

The website’s figures show median weekly rent remained relatively flat at around $310 to $320 for nine months after the earthquakes, and did not start to increase until November 2011, he said.

But rents rose steadily from that point, and reached $450 by July 2013.

Ray White head of property management Zac Snelling said rents did not increase immediately as many were bound by fixed terms, but when tenancies expired or reviews came up the market had changed.

“They started to increase noticeably when EQC repairs started about six months to a year later after the 2011 earthquake.”

There was no rent freeze, but his team did not see rent arrears increase significantly over this time, he said.

“Many owners ended tenancies by agreement where tenants were traumatised and wanted to leave the city, or offered compensation if there was a significant loss of amenity.”

The spike in rent costs continued for several years until about 2015, Property Brokers general manager of property management David Faulkner said.

“After the impact of the rebuild started to kick in, Christchurch actually ended up with an over-supply, and rents plateaued, and then dropped a bit.”

Christchurch still had more rental properties, and lower rents, than many other cities, he said.

Covid pandemic 2020 to 2022

When New Zealand locked down to keep Covid out in March 2020, there was a big drive to get everyone off the streets, and into accommodation.

As part of that, the Government passed urgent legislation which froze rents in existing tenancies, and also put a stop to almost all evictions, for six months. The rent freeze did not apply to new tenancies.

But after the freeze ended the average national rent soared up 11% by the end of that year, according to MBIE rental bond data.

Rents have risen steadily in most parts of the country since, and Trade Me’s latest figures show the national median weekly rent hit an all-time high of $595 in January.

Faulkner said rental markets in Queenstown and Auckland’s CBD were most impacted by the pandemic, and the measures, such as border closures, taken to combat it.

“Queenstown was hit by the departure of tourists and foreign workers, while Auckland’s CBD was stung by the absence of international students, and both had significant rent reductions.”.

But Queenstown’s popularity as a holiday location means there is now a shortage of rental properties again. In contrast, rents in Auckland’s CBD remain below pre-Covid levels.

Westport floods 2021 and 2022

Westport was hit by devastating floods in 2021, which left 563 houses either red or yellow-stickered. Further flooding, and damage, followed in 2022.

The impact on the town is ongoing, with some homeowners still waiting for repairs to be completed, and the Temporary Accommodation Service still involved in housing displaced families.

Snelling saids some rental properties were only now being completed after requiring significant renovations, so demand exceeds supply.

“Rents have increased slightly, but it is hard to say whether it is due to the floods, or simply that the demand in Westport has been higher because there was a shortage of rentals anyway, even prior to the flooding.”

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