Demand is vastly outstripping supply in the rental property market, which spells payday for landlords and investors. 

According to Trade Me property’s latest house rental data for the fourth quarter running from October to December demand is up 13% on a year ago.

“It’s good news for landlords if there not going to have their properties sitting round vacant for long periods of time because the fact is the demand is there in the rental market,” Trade Me property’s head Brendon Skipper says.

Auckland had strong demand increases with Manakau, Waitakere and the North Shore having respective demand increases of 25%, 20% and 19% on a year ago.

Nationally average rents are up 3% and if demand stays around current levels Mr Skipper expects them to continue rising.

Listings were down 6% nationwide on the same period last year and was a reflection of the increased demand as stock was quickly snapped up, Mr Skipper says.

Christchurch had the largest decrease in listings with a 32% decline from a year ago. This was a direct result of the earthquakes removing stock, he says.

This decrease in supply say demand jump 42%, the highest nationwide, and led to the highest average rent increase with rents jumping 10% on the same period last year. Auckland City had the second highest increase of 9%.

“There was talk that there was going to be a massive increase in the rental prices there, but we’re not really seeing that. There is an increase and it’s absolutely driven by demand but it is not as scary as some would have thought when the events first happened,” Mr Skipper says.

In the traditional student strongholds of Palmerston North and Dunedin supply was up 8% and 28% respectively and average rents up 4% and 6% respectively. The only other are to have an increase in supply was Lower Hutt with supply 7% on a year ago.

“There is a bit of blip because obviously the students aren’t in that market at the moment,” Mr Skipper says.

But when the bucketheads and scarfies return this coming quarter he fully expects the demand to ramp in those areas as they look for flats.

“Landlords in these cities will be eagerly awaiting the return of the Otago and Massey students in the coming weeks- and students look set to have plenty of flat options to choose from as they get organised for the first semester of 2012,” Mr Skipper says.