Average housing rents across the entire country increased by $55 a week over the 12 months to the end of March, but there are early indications that they may have started to retreat from recent highs.
Based on bond data from Tenancy Services, the national average rent for all newly tenanted properties in the first quarter of this year was $545 a week, compared to $490 a week in the first quarter of last year.
That's an increase of $55 a week, up 11.2%.
In the major urban areas the biggest annual increase in dollar terms was in Porirua where average weekly rent jumped from $542 in the first quarter of last year to $640 in the first quarter of this year, an increase of $98 a week (+18%).
The smallest annual increases were on the North Shore and in the central suburbs of Auckland, which both posted comparatively modest annual increases of $26 a week (up 4.1% and 4.6% respectively).
Of the major urban areas, Timaru had the lowest average weekly rent at $388 a week and Porirua the highest at $640, just above Auckland's North Shore at $638.
However there are tentative signs that the first quarter figures may have marked the peak of rental growth and rents may be started to retreat slightly from those highs.
The monthly rent figures show that the national average weekly rent peaked at $550 a week in January and then slipped back to $545 in February and $540 in March.
Similar trends are evident around most of the rest of the country, with average rents tending to peak around December/January and then ease back slightly in the following months.
However the monthly figures can be more volatile than the quarterly figures, so it is too soon to be able to say if that is an ongoing trend.
As always, landlords will be hoping that rents keep rising, especially if their properties are mortgaged, while tenants will be hoping for some relief.
The table below shows the average rent in all main urban districts in the first quarter of this year and their annual change.
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79 Comments
... hmmm ... so , the government's attempt to fix the spiralling rise in rental costs by repeatedly kicking the snot out of landlords has backfired ...
Well ... who'd have thunk it ... teee heeee ...
seems they are declining gummy.....along with house prices and easy cash.
Greg's article says that rentals rose by an average of $ 55 per week across NZ ... rose in the period after all the " adjustments " to stop the rises ... I love hybrid teas & floribundas , but can't abide rental roses ...
spiralling. good word. like letting go one of those kids spring toys. and entwined with it too. food, power, fuel, building material, household provisions and trade services. you name it. springing up and up all over the place, with the not unreal prospect of inflation getting close to 10% or over. just as well it’s transitory isn’t it.
... I do wonder how a pragmatic conservative like Bill English would've handled the nation's finances since Covid19 .... compared to the borrow , tax & spend-up-big policies of Robbo ...
Given that the immigration tap was turned off, I suppose they would have tried to sell off whatever public assets they didn't get to last time, in a naive notion of balancing the books.
Probably would have boosted GST to 20% as well ... conservative guess.
Borrowed and spent like after the Chch earthquake, but austerity for some sectors?
Yup. The RBNZ did a report in 2016 on the rebuild as follows.
- Page 3: The Reserve Bank estimates total construction cost to be $40b. $16b for Residential, $16b for Commercial, $7b for infrastructure.
- Page 5: By 30/9/15 insurance claims had yet to be fully settled, but insurers had paid out $26 billion.
So $14b was the rough outstanding cost if no more claims were settled. Yet we borrowed $50b in response to this earthquake????
https://www.rbnz.govt.nz/hub/publications/bulletin/2016/rbb2016-79-03
I have neither faith nor respect for this government but I would certainly agree the Key/English government handed them an absolute poisoned chalice concerning EQC & Southern Response. The botched repairs that were organised through Fletchers, under a no fault disclaimer, cost countless $ millions. Repairs that should have been left for insurers needlessly fell to the account of taxpayers. A colossal own goal. But worse households that should have been protected by the EQC Act etc had their lives relentlessly and carelessly upheaved and there are many, many scars still to prove it.
And let's not even start with Southland Finance ...
Which adjustments are you referring to?
... someone's been asleep for the past 2 years ? ...
No, I'm pretty clear on all the changes made recently. I'm just not sure what you're referring to when you talk about the adjustments to stop rent increases.
... I think the most egregious of the many anti-landlord adjustments was to disallow interest payments being offset against rental income ... a legitimate standard business practise , denied to landlords ...
I guess if its a legitimate business, then business rates of debt lending should be applied relative to the risk profile?
As opposite to just using the non-business rates that private citizens use for owner occupied homes.
Again you're on about that. The interest rate is based on the risk of the underlying security.
That adjustment is phased in over 4 years though and has only begun impacting landlords finances this year.
Greg's article says that rentals rose by an average of $ 55 per week across NZ ... rose in the period after all the " adjustments " to stop the rises ...
The article says that rents peaked in December and have been dropping since. Why do you suppose that is the case?
It's questionable that being a residential Landlord is actually a standard business and it's easy to make a clear distinction.
Standard businesses employ people, collect and pay GST, pay business rates on lending. Standard businesses generally do not have the luxury of locking in a single customer to a 12 month fix term for regular payments of 50% or more of the Median Wage. Can a standard business survive by carrying forward losses for 10+ years until they become cashflow positive and then effectively pay no tax for another 5 - 10 years as these losses are used up? (or did they fix this one?).
Yes in many respects property investment the past 3-4 decades was a tax dodge for reducing ones taxable income while simultaneously a debt speculation exercise, that has been guaranteed by the taxpayer and the central bank.
All of the above have or might now be reversing course.
As you say, who in their right mind establishes a business/company with the intent of making long term losses.....(of course its just been a capital gains exercise).
Plenty of people establish businesses with the expectation that they will run at a loss for years. In fact, most businesses run at a loss for a long period of time before turning a profit. It took Amazon 9 years before it became profitable, Uber has also been operating for 13 years and is still unprofitable. Xero took 14 years to become profitable.
Again, the major differences is that these employers hire people. Landlords claim that they hire tradespeople and contribute to the economy in that way, but I think that's bullshit and maintenance is very overstated.
Anecdote: I was renting a property, a section of the tile floor completely gave way i.e. a 300x300 square hole to the ground with cracked tile edges. Our landlord who owned a building company with an office next door took 3 months to get it fixed.
Gummy, do you listen to guns and roses?
Funny, though, that whenever investors hit a regional town first the locals start complaining about high house prices, then next they start complaining about higher rents and fewer rentals. Hard to determine just whether speculators are saints, or their speculation is the cause of higher rents in such cases.
Meanwhile, Auckland - our biggest market - seems to have had an average rise of 7.6%. Right in line with inflation. How can that be when the govt has been mean to investors and we'd expect so much larger rises as they flee in horror?
Very interesting seeing the Hutt updates one of our commenting community posts on here regularly. As speculators' stock accumulates, more being put up for sale and rent...and sale prices and rents falling over the last few months. How much is based on speculation vs reality?
This is exactly what has happened in Whangarei. Hopefully when prices fall, then so will rents, and they can take the loss for once.
Unintended consequences?
Thanks to the “Tenant tax”. Life just got tougher for everyone.
It’s true. No tax has ever made anything cheaper.
Porirua rents always seem crazy high.....
I suspect all the new developments around Whitby and all that skew things a bit. A lot of high specced places for rent.
Also highest rates in the country by comparison. Gotta make up for state housing not paying their fair share of rates somehow.
I may be wrong, but I feel the majority of these rises is simply greed. Completely anecdotal, but I took a lease in Parnell in 2020 at $950 a week. The landlord booted us after a year and tried to sell it. Failed to sell and then attempted to rent for $1050. The price has now dropped to $950, the same as it was is 2020. Still no takers.
I have noticed a few other examples of this, so my question is - are landlord's actually raising rent to "market rates" or are they simply counting on the fact it is a pain in the ass to move house. I suspect that if these raised levels hit the open market they would not be filled at that rate (in Auckland, at least)
The average rent is based on new bonds submitted to Tenancy Services, not existing leases where the rent has gone up as Tenancy Services has no visibility of those.
This is such an important point when gauging rent rises. Landlords often only raise their rents to market rates between tenants.
On the nail, AdamJay1990!
Although a lot of landlords/landladies are decent folk, there are lot who have little empathy for the people they house. In the comments section on this site, landlords have been seen openly talking about their tenants as "commodities" (something to be acquired, used and dispensed with), and their policy is to milk them because they can (for as long as their tenants put up with it). This type of landlord has been spoilt by the phenomena of loose monetary policy over the last 40 years, and seems to carry this sense of entitlement to a pay increase once or even twice a year. They often don't need to raise the rent, but it gives them pleasure to do it anyway. They can go shopping for more flowery shirts, spend more on foreign travel again and move up a shelf for their wine supply. They will always complain when government policy inconveniences them and delight in "passing on" the cost to their already financially-strapped tenants.
But, as I said, there are equally a lot of good ones out there who are not like this.
It amuses when landlords try to put forward an image of being professional business people but at the same time they like to look down on their customers as being inferior to them and often like to call them lazy so and so's who should be more like them by trying to 'get ahead' by also turning other people into their rent slaves. While saying that people who receive government subsidies like the accommodation supplement are losers, while putting rents up and effectively taking those subsidies themselves and becoming the actual the beneficiary of the taxpayer.
Its crazy stuff.
Then again...this isn't reflective of all landlords...I've met and dealt with some great ones in the mix as well.
But the general culture of landlording in this country I find to be quite toxic (in comparison to other countries I've lived in) and not good for the future financial and social stability of the country.
Well said
I have a tenant, we charge below market, and am about to give him a sheep from home kill. Great tenant, very helpful and takes amazing care of the property. Not everyone treats tenants the way you describe. For some of us it's a long term thing.
There are thousands of tenants and thousands of landlords in this country. Any comment you see trying to bundle any of these large groups into a preconceived idea needs to be called out as rubbish!
People have been told by their accountants what the new tax rules mean for them and are adjusting.
No more cheap rentals in NZ.
They were cheap? (lol...)
Yip, turns out it’s like every other business. Raise the costs and the business has two choices, go broke or raise the cost of the product.
Rents will move higher again once provisional tax bills start coming in.
Really don't care about YoY stats at this point. The desperation is real....
More inflation data feeding into CPI for higher future interest rates.
Just wondering at what point the renter class break....the price of everything is going up on them....what will they stop buying/paying for first? Food, fuel, or rent?
Renters don't realise the potential power they have... a nationwide rent strike would be impossible to counter if enough participated.
They might protest with their feet....by stepping onto a plane elsewhere.
I'm convinced rents will come back to at least 2018 levels. On trademe there are over 6,000 properties for rent in Auckland and more than 4,000 are available now.
Landlords are going to need a reality check.
Kwbrn - I agree. The data in this article is referring to the past year (March 21-22). We are at an inflection point for rents, and my view is that they will start to move downwards, if they haven’t started to do so already. Auckland will likely lead the way. The amount of new builds just completed or going up here is just phenomenal, and our population has been falling for several years now. The number of AK rentals on TradeMe is way above what is usual for this time of year, and places seem to be staying on the market longer.
I have been monitoring townhouses in Auckland since March. When I first looked in mid March there were 420, as of 3pm today there were 498 on TradeMe. It was around 450-460 for quite a while but has leaped up suddenly towards 500 in the last 1-2 weeks as more new build townhouses have been completed - my hypothesis proven.
All this new supply coming will moderate rental inflation.
In Queenstown if they went back to 2018 levels that would be a 20% increase.
Auckland has had more people leaving than arriving so is probably a bad example to use.
...up 11.2%...
Reserve Bank won't be happy about that. Rents, as a subcomponent of non-tradable inflation, should be static or falling to help ease cost of living and offset big gains in tradables like fuel and food. More rate hikes needed I suppose to quench excess demand.
Well New Zealand as an economy has very little resemblance to that of the USA but it does follow, liking it or not, in the wake of the big players. Let’s say the G7. That being so, the inflation figure for the USA, given here in the briefing column today, cannot fail to be something of a harbinger and ominous.
It can become a bit of a death spiral huh....this feeds into CPI....so OCR goes up....so mortgage rates go up....so debt burdened landlords put rents up to cover costs.....which feeds back into CPI....so the OCR goes up....so mortgage rates go up....so debt burdened landlords put rents up....(and so on and so forth).
Yep, I’m no economist, not even an accountant, but from personal experience(s) over some years, what you say resonates. rings true in fact!
Yes which is why it was important that central banks stepped in early to prevent inflation from becoming established in the economy - oh hold on they didn't.....they told the world it was 'transitory' because they couldn't afford for it to be real because trying to fight/stop it would crush the consumer and have a high risk of causing the debt bubble to burst.
Yeah, raising interest rates can really only make rent go up in the short term. It does have the intended effect of squishing aggregate demand though: you'd cut down on eating out to make the rent.
Yes there is the possibility that raising rates will actually cause inflation to go even higher in the short term as businesses start raising prices and passing their increased costs onto consumers.
That will work temporarily until something breaks when the average consumer in the economy has to stop paying for something...
Be it food, energy/fuel or rent/mortgage.
Having negative real rates like we have, it is only a matter of time before something breaks as costs are growing faster than incomes.
I think things are already starting to break, no need to wait...
Coming back from going away for long weekend there was no long queues of traffic coming through Warkworth, it was actually quieter than last time I went through there on a normal weekend.
It could have been because of the weather but I think it is more likely that people are starting to factor in the cost of petrol for driving away to family holidays
The interest rate / rent / CPI spiral? Probably a lot more likely than the wage / price spiral at the moment.
"...rent peaked at $550 a week in January and then slipped back to $545 in February and $540 in March"
How's this increasing the rent to cover extra costs going landlords? Mortgage servicing is going up a lot more than 11.2% and your losing an entire years rent in capital every couple of months.
WELL DONE JACINDA
Looks like the drive to put all small business out of business and everyone on govt support is working.
Lets drive ALL business compliance costs up in all aspects of business, including property investors, and increase inflation and ramp up a COST OF LIVING CRISIS, for all New Zealanders.
Then no one can get ahead, except for the really wealthy corporations.
And EVERYONE, is forced to be serfs and servants on social welfare, looks like the socialist communist LABOUR AND GREENS policy is finally working and achieving its goal.
Congratulations !!!!
Hey Bluekiwi you sound angry.
I’m just a bit confused. Help me out and explain your reasoning.
It’s good when houses become more expensive but not when other goods and services do.
It’s good when rents go up but not when food and petrol does.
The cost increases and interest rate increases will only send businesses and landlords that have too much debt, not enough equity and negative cashflow broke….I hope you haven’t based your business model on some other theory.
It’s the debt that is the problem.
And ... it's good when Bluekiwi turns somebody into a serf, but not good when the government does it.
Hold on a minute mare. Labour ain’t socialist or communist - they are a slightly left of centre party; arguably even right of centre with respect to many of their economic policies. Please lets not bring in the US style demonising of our political opponents into New Zealand! And inflation is currently an issue most everywhere, whether the government is left or right or centre.
... correct me if I'm wrong , but the Chinese aren't a communist regime either ... a capitalist dictatorship seems to sum them up , currently ...
Surprising the (relatively) small rise in Wellington. Wonder why?
Reality sucks! my mate Richard told me almost 40 years ago now. Blimey 40 years. But he was & still is right. Problem is, todays govts don't want to know about reality. At all. As evidenced in their money printing, QE, whatever you want to call it, protecting the people from themselves & the big bad world (covid crap). Reality is tough. Every day for some people & not just the poor people. IE: Reality has cost us a quarter of a million or more this past 30 months. Buggar. But that's our reality. So what do we do about it? We go to bed early, try to sleep well, then wake up again tomorrow, put a smile on our dials & try again. That's all we can do.
So just refuse to pay the increase? If you already pay 50% of your income in rent, just refuse to pay. Force it all the way through the tribunals and fight it that your service did not improve despite price hikes.
Yes. Our landlords tried to hit up with another $40 increase, or something like that. We simply said no I don't think we'll pay more, and will look for other accommodation. They quickly backed down and carried on as is. Not worth the cost and hassle of finding new decent and consistent tenants.
Though it's a bit easier when you've no kids, plenty of savings and not much to lose. Others may feel trapped or stuck. The amount of rentals hitting the market should give them confidence though.
This is interesting.
There are a lot more rentals hitting the market and more houses for sale.
So - if there is still demand - then who are those people needing a house and where are they living instead of a rental/mortgage?
Anyone noticed that Timaru is shown twice in the table in the article with different numbers ??
I wonder if rental prices will fall over the next 12 to 36 months.
Surely as
- House prices fall,
- Skilled workers leave Nz to be replaced with unskilled immigrants
- More rentals come on the market ( people moving domestically or internationally dont want to sell at a loss and builders finish houses that that dont want to sell either)
- inflation rises so peeps have less money to pay rent
We will be in a situation with
- Many more rentals available
- New landlords will be ble to undercut the market on weekly costs (as they will pay 25-50% less for their house)
- Tenants will have less to spend on rent.
Tenants should then be able to negotiate lower rents or move to rentals with lower rents
I cant see how landlords would raise rents but can see they would need to drop rents to market prices?
Not familiar with the workings of it but will the accommodation supplement provide a floor for rent prices?
It shouldn't do. It's the landlords that can't find a tenant that will drag the rents down, not what a tenant is capable of paying.
e.g. Tenant rents place for $600 per week. 12 months later they see an identical property advertised for $550 per week because the landlord can't find a tenant. The rent doesn't suddenly jump back up to $600 per week due to the Accommodation Supplement.
Thanks, that is what I wasn't clear on.
if it was just a complete pass through the person "paying" doesn't actually have to contribute their own money so is less likely to care... but glad to hear that is not the case
Still not seeing a lot of "replacing" of people, first 9 days of June and we've lost another 8k people.
Date Arrivals Departures
- Wednesday 1 June 5,335 6,765
- Thursday 2 June 5,478 6,494
- Friday 3 June 6,071 8,314
- Saturday 4 June 6,021 6,779
- Sunday 5 June 6,719 7,663
- Monday 6 June 7,065 6,852
- Tuesday 7 June 5,289 6,383
- Wednesday 8 June 5,882 6,334
- Thursday 9 June 5,905 6,040
Over 26k by the end of the month then, and still 5 more months for a further 150 thousand to leave for somewhere "better"
A first class One-eyed review. You missed that workers and beneficiaries are receiving more take home. Chill, no one is taking their pay however tenants have more discretionary spend. Also that AS was increased a lot by the Labour govt. PS that is your tax money they are giving away
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