Like Icarus who flew too close to the sun, if rental property price increases continue on their current path, the Dunedin student rental market is set for a fiery crash.
This year the Otago University Students Association has seen countless examples of rent increases of $30 a room or higher, for flats that have no substantive changes or improvements.
One flat we’ve seen is facing a $40-a-room increase – a cost of $8320 for the year in a four-bedroom flat.
For a family, this level of increase would be completely unaffordable, but for students we’re expected to suck it up.
Between 2022 and 2023, the student living loan increased by only about $20.
In a cost of living crisis, when food and power prices have skyrocketed, students are now expected to find an additional $10 to $20 on top of this, just to cover a rent increase.
I would like to remind Dunedin landlords that market rent doesn’t simply mean what others are charging — it also means what students can afford.
As prices rise faster than student incomes, housing becomes accessible to an increasingly smaller subset of students who require more privilege and wealth than ever before to simply afford to live in Dunedin.
If prospective students can no longer afford to rent, they won’t come, and those that are here will leave Dunedin.
Retention rates at the University of Otago fell last year — this is already happening.
One of the key value propositions for students coming to Otago has been the affordability of the city. Yes, the flats are cold, but they were cheap. Affordable rents meant students could afford to move out of home, to come and study in Ōtepoti.
As prices increase and the quality remains the same, the value proposition for students is lost.
Why would you want to live in a cold, old house and pay extortionate rents, when you could stay at home or go to a more affordable city?
Consider the plight of Te Herenga Waka Victoria University of Wellington in comparison to the recent successes of the University of Canterbury. Rent in Wellington is famous for being incredibly high for houses that are often of low quality.
On the other hand, Christchurch is saturated with post-earthquake new builds with rents that are surprisingly affordable.
Christchurch as a city too is becoming increasingly vibrant, with an attractive culture for young people rivalling that which previously drew them to Wellington.
If you’re a prospective student looking to borrow tens of thousands of dollars to live, which would you choose?
Without a rapid correction in rent prices, Dunedin is headed down the same path as Wellington.
It is also worth considering the difference between the Wellington and Dunedin rental markets.
Wellington rents are high because properties are generally in high demand. Dunedin, however, has a unique student rental market, comprised of properties that would be unsuitable for families and other non-student tenants.
Landlords in Wellington are able to fund other tenants; the same cannot be said for Dunedin.
If students stop coming to Otago as a result of the cost of living, landlords will lose their tenants. The rampant short-term focus on rental price increases only brings pain to those in search of rental properties and increases the risk of losing future tenants.
Tenants are of course aware that costs for property owners have increased, but investments by their nature carry risk. Losing your tenants will hurt more.
It might seem strange to have the president of a students association providing advice to landlords, and normally I would steer well clear.
However, these price increases are creating serious pain in the student and university community and deterring prospective students.
I would hate for students to miss out on the opportunity to study at the best university in the best city in Aotearoa because they can’t afford the rent.
So, to the landlords of Dunedin, remember that Icarus didn’t find the limits of his invention until it was too late.
Large rent increases may bring about short-term gains, but the pain it brings to the student community is long-lasting.
— Quintin Jane is the president of the Otago University Students Association.
