To kick off the academic year, Trade Me Property took a look at rental costs in New Zealand’s major university cities.

Head of Trade Me Property Nigel Jeffries says, apart from Christchurch, there have been significant rent increases in the median weekly rent in each of the cities over the last two years.

Not surprisingly, Auckland had the biggest increase. It is up by $50, to $500.

But the median weekly rent is also up in Hamilton (by $35 to $360), Dunedin (by $30 to $330), Palmerston North (by $25 to $310) and Wellington (by $10 to $480).

After experiencing a big spike (to $450) last year, Christchurch’s median weekly rent fell by $30 to $420, which was $5 less than in 2014.

However, while the returns on student rentals can be good, there are issues landlords need to look out for.

Destructive parties or rent arrears are often seen as the biggest potential issues when owning student accommodation, but in reality, that’s not the case.

Recently there have been issues around empty student rental accommodation. There have been reports that Dunedin currently has an oversupply.

Jeffries, who has children studying at Otago University, says he gathers this is probably due to a drop in student numbers.

Sudden changes in supply are an issue for investors in the student accommodation market.

In Jeffries view, such issues are more likely to crop up in Auckland, which currently has a large amount of apartments in the pipeline, and potentially Wellington, where a lot of apartment building is also going on.

“It’s hard to predict exactly when there can be an increase in the volume of student rentals. But they can turn up quite quickly and that can be problematic.”

Positive Real Estate director Campbell Venning has personal experience of this.

He used to own student rentals in Dunedin, but when the Licensing Trust offered to pay for students who went down to the Southland Institute of Technology, it resulted in a 30% vacancy rate in the Dunedin rental market.

“I wouldn’t go back to Dunedin as an investor because you are too reliant on the student market. That’s as opposed to somewhere like Wellington where there is a strong market of professionals also looking to rent.”

However, Auckland Property Investors’ Association president Andrew Bruce says he has had very minimal problems with the student rentals he owns.

There’s a big market of English language students who want to live in Auckland CBD apartments, he says.

“In my experience, this market has made for reliable tenants and, due to the lesser maintenance costs involved with apartments, such rental properties tend to be a cost-effective investment.”

Student rental horror stories about over-crowding or massive damage tend to stem from situations of property management neglect, Bruce says.

“Landlords should always specify the numbers allowed to live in a property on the lease. And they should make sure regular inspections are conducted. That way it is possible to maintain some control of the situation.”