Christchurch rental crisis

61 comments on “Christchurch rental crisis ”

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1. vto 1

   18 April 2012 at 3:58 pm

   Winter is on our doorstep. If ever there was a risk of a very very bad situation developing (i.e. third world problems) then this is it. It could easily lead to forms of societal breakdown.
   • Robert Atack 1.1

     18 April 2012 at 9:11 pm

     Yeah it is called Shock Doctrine http://www.naomiklein.org/shock-doctrine
2. fender 2

   18 April 2012 at 4:03 pm

   $500 odd for a two-bedroom rental!!!

   No definitely no crisis says the sawdust brained hippo.
   • Lanthanide 2.1

     18 April 2012 at 7:20 pm

     Anyone who actually paid that would be a sucker. I’m paying $280 for a 1-bedroom unit (in a nice area).

     My own 4+ bedroom, 2 bathroom house with minimal quake damage in a nice area is on the market for $690.
     • fender 2.1.1

       18 April 2012 at 7:36 pm

       That will be very affordable for a single income family wont it.
       • Lanthanide 2.1.1.1

         18 April 2012 at 9:35 pm

         Probably not, no. But at that price it just covers the mortgage.
         • fender 2.1.1.1.1

           18 April 2012 at 9:41 pm

           Have you ever lived in it? If you don’t nind me asking.
           • Lanthanide 2.1.1.1.1.1

             19 April 2012 at 9:31 am

             Yes.
     • Clashman 2.1.2

       18 April 2012 at 7:48 pm

       $690? Sold!
       • fender 2.1.2.1

         18 April 2012 at 7:55 pm

         Thats every seven days unless I’m mistaken. Must be a nice pad. Might need all the band to move in to help pay Clashman.
     • Descendant Of Smith 2.1.3

       18 April 2012 at 7:54 pm

       Certainly brings out the worst in people eh.

       Profiteering off peoples misery – why not let it for say $200-00 a week to a family who has lost their employment – you know help out your fellow citizens – nah market forces eh – I can make a profit so I will.

       Wanker just like the rest of the wankers charging excessive rents – cause you can.

       Alternatively move into your own home so someone can have your low cost accommodation. If all you need is two rooms take in a couple of boarders for a low cost.
       • fender 2.1.3.1

         18 April 2012 at 8:57 pm

         Some of the opportunism in disaster zones is legal, sadly.
       • Lanthanide 2.1.3.2

         18 April 2012 at 9:37 pm

         “Profiteering off peoples misery – why not let it for say $200-00 a week to a family who has lost their employment – you know help out your fellow citizens”

         Doesn’t seem like it helps my fellow citizens if the mortgage goes into arrears and the house goes up for mortgagee sale, now, does it?
         • Descendant Of Smith 2.1.3.2.1

           18 April 2012 at 9:56 pm

           So was it being rented out at $690-00 per week prior to the earthquake or were you living in it and paying the mortgage?

           If it always been rented out at $690-00 I guess you could argue that you are not profiteering from the earthquake.

           If you have moved out to cheaper accommodation to rent it out then you are profiteering.

           If you were living in it and could afford the mortgage before then unless something has changed such as losing your job then there would be no more risk of the mortgagee sale than there was before.

           I’m not sure why renters should carry your risk if you over committed yourself. If you can’t afford the mortgagee without rorting someone else then you’re not helping anyone anyway.

           I hope you were not trying to convey that you are helping someone by charging them $690-00 per week rent – that’s a pretty insipid argument.

           alternatively as I said live in it, charge a couple of people reasonable board and free up your cheap accommodation – there you could help three people all at once.
           • Lanthanide 2.1.3.2.1.1

             19 April 2012 at 10:02 am

             It was previously rented out for $520 a week for a 1 year lease that started 1 week before the Feb 22nd earthquake. So the price is now $170 more than that. It reflects the market price for rental now. I don’t believe I’m “profiteering” by offering a product at the market price.

             “alternatively as I said live in it, charge a couple of people reasonable board and free up your cheap accommodation – there you could help three people all at once.”

             I don’t see how this is any different than just charging the rental on it and living in another place myself. Any board I charged would also reflect the market price.
             • Colonial Viper …

               19 April 2012 at 10:11 am

               I don’t believe I’m “profiteering” by offering a product at the market price.

               The rationalising is very easy to do, and I have done it before. “I’m only following what everyone else is doing gaining more benefits for myself at the cost of others, but there’s no individual responsibility in this”.

               All the people who can no longer afford to live in their home city slowly squeezed out into the margins and beyond. Losing access to their friends and family, children’s schools, etc. But that’s OK as that’s simply the market working like it should.

               Or we could call it what it is: market failure for the people of Christchurch.
               • Lanthanide …

                 19 April 2012 at 11:23 am

                 If the mortgage on the property were lower (long story, mostly not my fault) then I would be in a position to take a lower rental. As stated, it was previously rented out for $520 a week and that left a significant shortfall on the mortgage.

                 Now that the market price is higher I’m benefiting, but I don’t see that I should be somehow ‘forced’ to take a loss.

                 The whole point of higher prices is that it makes people think “hmm, maybe I should take on a boarder or rent out my house and downsize because it’s financially worth it”, or in other words it increases supply to meet the demand.
               • Vicky32 …

                 19 April 2012 at 6:08 pm

                 All the people who can no longer afford to live in their home city slowly squeezed out into the margins and beyond.

                 Or living in their cars, as at least one woman I read about is doing… 🙁
           • Lanthanide 2.1.3.2.1.2

             19 April 2012 at 11:50 am

             Incidentally, if you charge less than market rent on a property, the IRD will tax you as if you were charging market rent.

             http://www.ird.govt.nz/resources/1/e/1efe4c804bbe591281ffd1bc87554a30/ir264.pdf page 11.

             I am not actually a non-profit charity.
         • vto 2.1.3.2.2

           19 April 2012 at 8:04 am

           Careful Lanthanide how much personal info you let loose around these places. Not wise imo.

           But anyway, you mentioned in two posts above that you live “in a nice area” and the rental is “in a nice area”. What qualifies as “a nice area”?
           • Colonial Viper 2.1.3.2.2.1

             19 April 2012 at 10:20 am

             Fewer poor people, fewer beneficiaries and fewer brown people. People who do civilised things at civilised hours. Streets where people have decent jobs and visitors who have nice cars parked in the driveways. Lawns are mowed and gardens tended to. No lower decile schools nearby, they are always a bit embarrassing and inconvenient for decent parents.

             Where the top 10% to 20% of NZ society lives.
             • vto …

               19 April 2012 at 10:36 am

               Yes, that is the generally accepted definition across the major population base, especially in oh-so-english what-school-did-you-go-to Chch.

               I notice you left out the excuse characteristic, crime stats.
               • Colonial Viper …

                 19 April 2012 at 10:42 am

                 I notice you left out the excuse characteristic, crime stats.

                 No I didn’t I mentioned brown people right?
               • Andy-Roo …

                 19 April 2012 at 12:49 pm

                 “especially in oh-so-english what-school-did-you-go-to Chch.”

                 Hey VTO – I think that vision of CHCH is about 30 years old – just my opinion, but might be nice to see this trope recycled a bit less frequently.

                 Don’t think it helps.Could be read as looking down your nose at us.

                 Pot / Kettle?

                 Cheers

                 Andrew
                 • vto …

                   19 April 2012 at 5:15 pm

                   Hi Andy, noted, however I keep coming across it. Had a recent long discussion with a Chch native and challenged her on these views but the insistence was strong from her side that these things are very real and very important. And they are – to these people. It is as strong, if not stronger, than it has been in the decades I have been here. Noticed it when I first arrived and it has not diminished imo.
           • Lanthanide 2.1.3.2.2.2

             19 April 2012 at 11:31 am

             “What qualifies as “a nice area”?”

             Ask a real estate agent.
             • vto …

               19 April 2012 at 11:36 am

               Come on Lady Lanth, that is a dive for cover if ever I saw one. It was you who referred to “a nice area” twice, not a real estate agent ………
               • Lanthanide …

                 19 April 2012 at 11:41 am

                 Well if you want my personal definition of a “nice area”, then predominately it is one where there aren’t boy racers or lots of traffic and street noise.

                 Sorry if you wanted something more prejudiced.
       • Vicky32 2.1.3.3

         19 April 2012 at 6:05 pm

         Alternatively move into your own home so someone can have your low cost accommodation. If all you need is two rooms take in a couple of boarders for a low cost.

         Seconded! Absolutely…
     • Toby 2.1.4

       19 April 2012 at 6:44 am

       $690 sounds like a rip off. I hopes it’s really flash.
       • Lanthanide 2.1.4.1

         19 April 2012 at 9:32 am

         It’s the market rate for a house of it’s size, location and condition.
         • Majella 2.1.4.1.1

           19 April 2012 at 10:00 am

           At $690 per week for the mortgage payment – this must include capital. At 6%, the $690 pw implies a mortgage of $598,000 – not unusual, perhaps, but sounds a bit OTT. If, therefore, you are usuing rental cashflow to repay capital, then those accusing you of exploitation may have a point.
           • Colonial Viper 2.1.4.1.1.1

             19 April 2012 at 10:23 am

             Lanth would like his tenants to pay his home off for him now that the market gives him the opportunity to do so. If his previous tenants or ones similar to them can’t afford the new realities of a 30% rent increase, they can downgrade to a ‘less nice’ part of town.

             It’s not Lanth’s problem that’s just how the market works, and those with capital like it that way, and those with the most capital like it the most.
             • Lanthanide …

               19 April 2012 at 11:25 am

               “If his previous tenants or ones similar to them can’t afford the new realities of a 30% rent increase, they can downgrade to a ‘less nice’ part of town.”

               I believe that is the case with the previous tenants, a bunch of students that really pissed off the neighbors with loud parties every weekend and were served a 14 day notice by the management company to rectify or have the tenancy terminated.

               All I was ever told is that they had declined to extend the lease further, but I suspect that is after the management company indicated the rent would be going up significantly.
           • Lanthanide 2.1.4.1.1.2

             19 April 2012 at 11:20 am

             The $690 is the gross rental, it doesn’t include management fees or other average maintenance costs (typically low).

             When I say “covers the mortgage”, I do mean covers the principal and interest repayments. But it doesn’t cover insurance or rates, which work out to another $3,000 per year roughly.
             • Majella …

               19 April 2012 at 11:29 am

               Shame all those delicious Loss Attributing Qualifying Company benefits have been pretty much shut down, huh?
               • Lanthanide …

                 19 April 2012 at 11:33 am

                 I never used them.
             • Majella …

               19 April 2012 at 11:30 am

               Management Fees? When you LIVE in the same town? Are you helpless/hopeless?
               • Lanthanide …

                 19 April 2012 at 11:33 am

                 “Management Fees? When you LIVE in the same town? Are you helpless/hopeless?”

                 Actually I have a full time job and don’t want a second one managing a rental.
3. vto 3

   18 April 2012 at 4:12 pm

   One of the very strange things about this whole disaster is how it is a tale of two cities. Everything out east is really devastated and people live in broken homes and communities which look like something out of somewhere horrible, yet out west life has been pretty much as per normal with people living normal lives in normal houses and normal streets with normal malls at the normal corner. It is quite bizzare. (though frankly the normal scares me more)
4. marsman 4

   18 April 2012 at 6:10 pm

   Gerry Brownlee has decided that his inept ‘govt’ should be in charge of the Chch rebuild and it seems their big priority is………a fucking convention centre! Can you believe it? Families renting garages to live in. These pudding brains don’t give a fuck about the people of Chch.
   • Draco T Bastard 4.1

     18 April 2012 at 6:57 pm

     These pudding brains don’t give a fuck about the people of Chch.

     Or the people of NZ (except themselves and their rich mates). Also, pudding brains is inaccurate – some of them are quite intelligent, psychopathic yes, but still quite intelligent.
   • Drakula 4.2

     18 April 2012 at 8:30 pm

     Marsman; I understand your anger, we need to get organizing. The Selwyn District council is building a flash swimming pool and recreational center at Rolleston (at over$14 million) and it has just proposed to loan/gift a few million to Central Plains Water. Earthquake infrastructure damage? Earthquake? what earthquake? There is always the ratepayers, they’ll come to the party.

     There is a saturation point isn’t there.
   • dave brownz 4.3

     18 April 2012 at 8:36 pm

     Too true easy too see through.
     http://redrave.blogspot.co.nz/2011/04/disaster-capitalism-downunder.html
5. happynz 5

   18 April 2012 at 6:26 pm

   One thing – I noticed a few weeks ago that there are at least several dozen portable houses sitting empty on the old Women’s Hospital site on Colombo St. They’ve been there for months. What’s up with those? Why aren’t they being used?
   • Clashman 5.1

     18 April 2012 at 7:50 pm

     That would be interferring with God. aka the “market”
   • bbfloyd 5.2

     19 April 2012 at 12:33 am

     if it is the same company who built them that i knew of, then they havn’t been paid for….. only a guess,(i’m assuming fletchers had more than one outfit making houses) but i know someone who went there to train up a team to make them… he mentioned a toxic management environment…..

     maybe someone twigged in time that there were profits to be made if the supply of temporary housing was choked off….
6. tsmithfield 6

   19 April 2012 at 7:08 am

   I have some thoughts on this issue:

   Firstly calls by some Labour politicians for rent controls show they don’t grasp economics 101. From the article:

   Dalziel said …”The Government has to intervene. It has the most extensive powers that any government has had since wartime,…” She said there needed to be a cap on rent increases to stop landlords taking advantage of quake-hit residents.”

   Price controls are about the worst thing that can be done to solve a supply problem as studies of price controls after Hurricane Hugo demonstrate.

   Secondly, at an awards function for Harcourts that I attended with my wife (a Harcourts agent), I talked to members of the rental division who told me that the problem has actually been exaggerated by the media. Case in point, my parents (red zoners) are leaving their temporary rental accommodation into their new home this week. The rental agency arranged with my parents for a time slot for them to bring potential tenants through. Not a single person came through, and the property is still up for rent a week later.

   Thirdly, government interventions cause distortions. I suspect those worst affected by the current rental shortage are not red zoners, but rather the average person seeking somewhere to rent. That is because red zoners usually have accommodation cover from their insurance company for a period of time. Then they can hook into the government $300 per week rental subsidy. This “free” money for rentals is helping drive up prices. But these subsidies are not available to non-red zoners, who still have to pay market prices.

   Fourthly, as the rental agency pointed out to me, there is some justification for increased rental prices anyway due to increased costs for landlords such as insurance premiums going through the roof.

   Fifthly, any intervention the government does needs to focus on the supply side of the equation. They need to build more temporary housing. Also, I think a good idea would be to make available to renters red zoned properties that the government has purchased that are still in reasonable condition, and to which services are still available. At the moment, government purchased houses are being demolished when the better ones could be made available for rental helping ease the supply side of the problem.

   Finally, there are a large number of subdivisions being pushed through, with some becoming available by end of year, if the council pushes these through quickly enough. Some of these such as Highfield are being aimed specifically at red zoners and the price brackets they can afford, according to enquiries I have made from the developers. The section sizes in this development start at 300 sqm, and house and land packages start at very affordable levels as can be seen by their promotional info. So, the problem, hopefully, will be very short-term.
   • Colonial Viper 6.1

     19 April 2012 at 10:54 am

     ahhhhh tsmithfield, excuses for creating a society where everyone gets more money, landlords, insurance companies, the council, and the poor little citizen gets it up the ass.

     Thirdly, government interventions cause distortions.

     Yes they do. They stop people from being shafted by a capitalist market system which has no interest in their well being or the well being of the community, just in profits for capital and asset owners.
     • tsmithfield 6.1.1

       19 April 2012 at 11:34 am

       Lets say the government decided to give everyone a $300 subsidy on their rents. Assuming the supply stayed the same, then rents would simply rise to accomodate the extra $300, so no one would be better off.

       This is what has been happening in ChCh, except that not all renters qualify for the subsidy. So those unsubsidised people find it quite difficult.

       In my parent’s case, they firstly had their rent paid for up to $20000. Then they took up the government subsidy of $300 per week. On a rental at $420.00 per week, even when their insurance had expired, they were still effectively only paying $120 per week for rent, which is SFA in todays market. However, an unsubsidised renter would find this rate quite challenging, I expect.

       So, as I said the answer is to increase the supply side of the equation. Price controls are absolutely ineffective and make the problem worse, not better. Have a look at that link to the effect of price controls after Hurricane Hugo.
   • Lanthanide 6.2

     19 April 2012 at 11:28 am

     “Fourthly, as the rental agency pointed out to me, there is some justification for increased rental prices anyway due to increased costs for landlords such as insurance premiums going through the roof.”

     Yep, my house insurance went up by 50%. Luckily I was paying too much for my contents insurance and so after reeling that policy in a bit my insurance costs are only up by about 30%.

     “Fifthly, any intervention the government does needs to focus on the supply side of the equation. They need to build more temporary housing. Also, I think a good idea would be to make available to renters red zoned properties that the government has purchased that are still in reasonable condition, and to which services are still available. At the moment, government purchased houses are being demolished when the better ones could be made available for rental helping ease the supply side of the problem.”

     Yep, definitely. My grandmothers flat in Bexley is red-zoned and slated for demolition next year. In the meantime it is being rented out to a couple of guys who are quite happy to live in it as they have family in New Brighton.
     • Majella 6.2.1

       19 April 2012 at 11:35 am

       Wow – Insurance up 50% – so from $500 a year to $$750? Huge increase to be sure, and ONLY just covered by rental increase from $27,040 ($520 pw) to $35,880 ($690 pw). Meanwhile mortgage rates remain at the historically low 6.0% (or less), probably for at least another year yet after 4 years already…In this environment, you must have made massive inroads into the capital, and if you haven’t then you have cocked-up!
       • Lanthanide 6.2.1.1

         19 April 2012 at 11:43 am

         Sorry Majella, but you actually don’t know very much about me or my circumstances. As previously noted, the $520/week rental left a big shortfall on the mortgage.

         You’re free to make whatever judgements you want based on what I’ve said of course.
         • Majella 6.2.1.1.1

           19 April 2012 at 11:51 am

           You’re free to make whatever judgements you want based on what I’ve said of course.
           Which is all I have done. You’re right – I don’t know anything about your circumstances, but the information you have volunteered leads to some probably reasonably accurate surmises. It all sounds like this property purchase was a ‘big mistake’ especially in 20/20 hindsight. Purchased at market peak…say 2006/07? I do wish you all the best in surviving the financial consequences.
           • Lanthanide 6.2.1.1.1.1

             19 April 2012 at 12:00 pm

             Purchase of the house itself, not so much.

             Purchase of the house as part of a relationship that then broke up, yes. It’s really quite common, having to split 50% assets (and in my case, liabilities) screws up a lot of people.
             • Majella …

               19 April 2012 at 12:02 pm

               You have my genuine sympathy.
7. happynz 7

   19 April 2012 at 8:20 am

   Case in point, my parents (red zoners) are leaving their temporary rental accommodation into their new home this week. The rental agency arranged with my parents for a time slot for them to bring potential tenants through. Not a single person came through, and the property is still up for rent a week later.

   How much is the rent on this accommodation?
   • tsmithfield 7.1

     19 April 2012 at 9:01 am

     Advertised at $420.00 per week for a four bedroom home in Spreydon.
     • NickS 7.1.1

       19 April 2012 at 9:02 pm

       Condition? Because 420/week sounds on the cheap side.
       • Lanthanide 7.1.1.1

         19 April 2012 at 10:36 pm

         In terms of quake damage, there was very little liquefaction or obvious housing damage (except for fences and chimneys) in Spreydon. $420 for a 4 bedroom house does sound pretty reasonable, so it may not be too flash on the inside?
       • tsmithfield 7.1.1.2

         20 April 2012 at 4:12 am

         Older house, but in good condition in a nice area.

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