I knew vacancies were pretty low, but the data we pulled up last monthtook me by surprise. Take a look at these figures:

This is the data for Impression’s property management portfolio, and we’re pretty creative about the way we match tenants with apartments. (Come on one of our bus tours if you don’t believe me.) This information means we’re looking at quite a substantial change in just two years. It’s also worth noting that vacancy rates are like employment rates – they never go to zero. There are always empty apartments because, when you manage over 1,700 apartments, there’s always a couple changing hands or being renovated. But, with vacancy rates of under 2%, it’s going to be hard for a tenant to find an apartment.

‘A rental shortage is the natural outcome of a strong emphasis on discouraging rental property investment’

Two years ago, with slightly higher vacancy rates, I was a little concerned about a flood of newly built apartments coming onto the market. Now, though, I know we need every single one of them. Fewer have been built than we were hoping for; developers have backed out of many large builds and the ones that have gone ahead are selling well. I’m now confident we’ll be able to find tenants for all the apartments that come under our management. While the media has been concentrating on a rental shortage in Wellington, I think Auckland is going to be under almost as much pressure in the future.

It sometimes seems as though the rental shortage has taken people by surprise. But a rental shortage is the natural outcome of a strong emphasis on discouraging rental property investment. It would be much more surprising if there wasn’t a rental shortage. Every rental property that leaves the pool, and becomes a house for a first-home buyer, achieves exactly what successive governments have been aiming for and what young Kiwis have been asking for. So that’s going to plan.

It’s easy to forget, though, that fewer numbers of people (generally) live in owner occupied properties. We also see this with apartments as the larger and smarter apartments have become so much more popular with owner-occupiers. A spacious two-bedroom apartment in the city might typically be rented by two couples, but when it’s sold it will be lived in by one couple. Again, these are all natural outcomes of emphasising home ownership and discouraging property investment – fewer available rentals, followed by a rental shortage, followed by sharply rising prices.

The result will eventually bring another natural outcome: Yields will improve and buyers will be tempted back into the market. Those hardy individuals, who have been buying this year, will be hoping that happens sooner rather than later. However, we’ll have to wait to see what happens with interest rates and overseas events. But, if our vacancy rates are anything to go by, rents are only going to go in one direction.

Aaron Tunstall is the general manager of award-winning Impression Real Estate, which specialises in property management and sales and manages over 1,750 Auckland apartments.