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Market Comment - September 2023

With student enrolment and inquiries reaching record levels, the residential investment sector is thriving. We are witnessing the ripple effect of increased student intake over the past couple of years, with a higher number of students transitioning from student halls to the private rental sector, mainly in their second year. All of our student housing has already been rented for 2024. It's likely that the University Vice Chancellor's office will plan new accommodation apartments in the next few years, so the private rental sector is expected to experience continued growth for some time.


Demand for three- and four-bedroom houses in desirable school zones remains high. Some of this pressure is due to family renters choosing to stay put, reducing the availability of family housing stock. Additionally, many property owners have exited the market over the past 12 months. The two-bedroom market, on the other hand, continues to see an influx of investment properties. However, it's worth noting that this market may have reached its peak, and some developers might reconsider their plans going forward. There's also pressure on rental prices for blocks of units that enter the rental market simultaneously, as owners compete for quality tenants.


A significant portion of tenant inquiries for rental accommodation is coming from out-of-towners, and there is a noticeable trend of younger individuals choosing Christchurch as their preferred city. With the arrival of spring, people are contemplating their plans for the upcoming summer and the new year. Given the strong migration to the area, this bodes well for the Christchurch rental market. It will be interesting to observe how the upcoming election might affect the local market. A potential change of government could have implications for both renters and residential property owners, making it a compelling time for those involved in the market.


There has been a slight increase in tenancies ending over the last three months compared to the previous quarter and the same period last year. This trend is expected to continue over the coming year as fixed-term tenancies become less prevalent.


Looking ahead, our focus remains on fixed-term tenancies whenever possible. However, with tenants having the option not to fix their tenancy, we anticipate seeing more periodic tenancies during the upcoming renewal period.


As for the impact of inflationary pressures and reduced consumer spending on rental rates, only time will tell. It is imperative to maintain high levels of employment to mitigate potential disruptions to the rental market.

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