Average planned rent rise climbs to 6.3 percent as majority of investors plan hikes in next six months - survey

Nearly 80 percent of respondents say they're planning rent rises in the next six months.
Nearly 80 percent of respondents say they're planning rent rises in the next six months. Photo credit: Getty Images

Nearly 80 percent of property investors are planning rent rises - and many intend to hike it by 5 percent, a recent survey suggests.

A March investor insight summary by independent economist Tony Alexander shows of nearly 400 respondents, 78 percent said they were planning rent rises in the next six months. The average planned rent rise has risen to 6.3 percent from 6 percent, the survey shows.

The most common amount investors planned to raise rents by was 5 percent (37 percent of respondents) followed by 10 percent (13 pct of respondents), survey results showed. 

"We must remember that rents are set with reference to the market and not just by [the] desire of a property owner," Alexander said. 

Meanwhile, a declining number of investors had plans to sell up.

"The proportion saying they are thinking about selling a property has declined to a low for our survey of 20 percent from 22 percent in February," Alexander said.

This month's survey results were stronger than many would have expected, he said.

"Interest rates are rising and one would expect the higher mortgage costs to dissuade people from buying property. The war in Ukraine brings an element of uncertainty and higher living costs which might also be expected to inject extra caution regarding purchases of all assets.

Tony Alexander.
Tony Alexander. Photo credit: File

"The results from our survey may be driven by the generally good long-term returns which investors receive on their properties and expectations of better returns amidst many reports of worsening rental accommodation availability.

"We should also note that 65 percent or so of our respondents regularly report their intention to hold their property for at least another decade."

The majority of the survey's respondents were in Auckland (40.8 percent) followed by Canterbury (14.3 pct) and Wellington (11.5 pct).