Residential rents remained largely flat in April, with the national median rent barely moving since late last year.
According to the latest bond data from Tenancy Services, the national median rent was $600 a week in April and has been unchanged at that level since December last year, apart from January when it crept up to $608 a week before dropping back to $600 in February.
However, compared to April last year the national median rent was up by $25 a week (4.4%).
In Auckland, the country's largest rental market where more than 4000 tenancy agreements were signed in April, the median rent was unchanged at $660 a week from March to April but was up by $20 a week (3.2%) compared to April last year.
Around the country the change in median rent over the 12 months to April ranged from zero in Nelson to $90 a week (16.4%) in Gisborne, which now has the second highest median rent in the country after Auckland.
This is believed to be mainly due to a loss of homes caused by Cyclone Gabrielle, which has worsened a housing shortage in the region.
A similar trend is evident with rents in Hawke's Bay - refer to the table below for the full regional figures.
The comment stream on this story is now closed.
•You can have articles like this delivered directly to your inbox via our free Property Newsletter. We send it out 3-5 times a week with all of our property-related news, including auction results, interest rate movements and market commentary and analysis. To start receiving them, register here (it's free) and when approved you can select any of our free email newsletters.
83 Comments
Still not inside the 3% inflation band target
rent inflation is one of those things which will actually slow with a lower OCR. Landlords are more inclined to push to the upper band of rents when they are cashflow.consteained by interest repayments.
i expect rents to jump in Auckland following the rate reviews and landlords realize they need to pass on the costs.
don't worry help is on the way soon there will be hundreds of granny flats put on the back of sections and that will put downward pressure on rents
Yea because many families will want to live at the back of someone’s house…
I think they are mainly aimed at relatives rather then other families, but there is no doubt that they will help add capacity.
Probably not a case of "want", than need. If you want to live in a nice freestanding house with a backyard, expect to pay a premium.
Not really, just look at the rent of apartments (not even in CBD) with no backyard or space, still a premium - in some instances more expensive than an older freestanding house.
There's a premium for new, and a premium for convenience.
Thanks for spelling that out. So assuming all these granny flats without a premium will be located in wellsford or helensville according that logic.
They're unlikely to be well represented in the CBD for sure.
Hence they will not be effective IMO, people will rather choose apartments for the same price in more convenient locations.
It's more rental stock, and depending on how it's implemented the capital outlay is far less. That should equate to lower rents.
If a 60m2 owes someone $150k, even if they want to make 15% return, that's still only $150 a bedroom/week (assuming it's a 2 bedroom unit).
If it's twice as much for a regular house or apartment, some people are going to opt for the cheaper option.
According to your calculations that’s around $2.5k per sqm to build, that’s well outdated - don’t think you can build even a low spec dwelling which complies with healthy homes standards for that price today.
Anyway - it’s going to take people with capital/ equity to go through the efforts of getting consent and building. I think it will have minimal impact on overall rental stock. If they had the land and were smart, they’d likely sell to a developer to really cash in. Land to add a minor dwelling in good areas is getting rare anyway.
According to your calculations that’s around $2.5k per sqm to build, that’s well outdated - don’t think you can build even a low spec dwelling which complies with healthy homes standards for that price today.
I can get it done for about $1750. PDK has a way you can do it for under a grand. But you probably wouldn't build, you'd use a prefab or kit. There's prefabs as low as $40k, but they're a bit nasty. $70k gets you a decent kitset home, for another 70 you can assemble it, fit it out, connect it up, etc.
The harsh reality is the cost to build the sorts of properties we've been building is pretty nuts. Especially in the shorter term, if we want lower costs, more rooms and lower rents, we will need to do sub optimal compromises like these 60m2 buildings to make some real traction.
Sucks if you own a $700k+ dogbox rental in Sth Auckland though.
It'll come down to how nerfed the final policy is.
"Sucks if you own a $700k+ dogbox rental in Sth Auckland though."
Oddly. I bought one a few years ago. On a 1,500+ sqm section.
Dogbox is gone. It was recycled.
No. Doesn't suck at all.
Why did you say it does?
If you flood the market with cheap rental accomodation, values in super sought after areas probably aren't going to shift much due to the wallets of owner occupiers, but they'll compete strongly with the lower end of the market for rental dollars.
This is all assuming Nationals rhetoric ever comes to light, but reading between the lines they sound like they might actually do something drastic to supply.
"Yea because many families will want to live in a granny flat rather than a van/emergency accommodation,shelter…" Fixed it for you.
Question - why do so many of the most empathetic altruistic people on Interest all have the word 'man' in their user names?
Amok, there are many on here without any experience and blab on a whole lot of nonsense regularly - Try that as another perspective. IMO granny flats have always been used for teenagers moving out of home, students etc, don’t think they will have much impact. They’re granny flats - they’re going to be small. They won’t be housing many families.
They're 60m2. So fine for 2-4 people (4's potentially a stretch). When they're living in these smaller homes, there's more total homes available for other people to rent (I.e. families), potentially at a lower price.
They’re max 60sqm*
Not everyone will have the space to build up to that.
But I also thought we didn’t want more homes to rent but wanted more people to own homes? (interest.co.nz commenters logic)
The "max" stuff is total bullsh1t.
It creates sub standard outcomes. I despair that governments and councils (and those that support such arbitrary measures) are so naive.
It is horses for courses. Always is. Always has been.
Sometimes perfect gets in the way of good enough.
The aspirations of the status quo has failed to deliver enough affordable accomodation for quite some time.
I tend to agree with you.
my wife and I once rented a granny flat many years ago. Wasn’t a great experience having the landlord living next door, always putting his nose into our privacy. And I think that can go the other way, too. Unless it’s a section greater than 700 - 800 sq m, it’s pretty hard to attain reasonable levels of privacy.
I think it’s an initiative with pretty limited potential. Not saying it’s bad, just fairly limited benefits.
Might be too logical for some people on here! Lol
Also, many "empathetic, wannabe altruistic" and rightous commenters read and comment without paying anything for David Chaston and his team's work. Quite cynical really!
In 2024, it's about what you say
Not what you do
Freeloaders.
Only $1.92 per week to read great well researched articles.
Seems to be the way for some to expect something for nothing.
I thoughts the ads paid for the Herne Bay office?
They probably do, then you have other expenses like wages for example. Why don't you get a nice shiny green tick next to your name Baywatch ? You seem to advocate fairness a lot on this site.
I would subscribe but as a landlord, reading the comments here give me a sense of impending financial doom. I then resolve to save my pennies
I was going to with my tax cut $..but then it got gobbled up with rent rise and diesel RUC, sorry EV RUC charges.
Are you proud of your not-so-funny excuses to not pull your weight Baywatch ?
Tbf Maybe some like myself have paid but don't appear to have a tick.
Yip. $1.92 is a bit light though.
Its going to be worse than that people are going to start digging out under their raised houses and putting in what they call a "Flat". Should be some really nice damp mouldy builds coming to a street near you in Auckland that have no windows. More third world stuff out of number 8 fencing wire.
I don't think this allows for modifying an existing property.
We don't seem to be able to afford first world, so maybe we're not.
It’ll still put downward pressure on rents either way.
Extremely wishful.
For cheaper rent they would. Yes.
I promise you they will and do for the right location - in a good school zone or fairly central. I'll never forget when we lived next door to one of them in a decent area, nice old villa suitable for one family had been split into two plus a non consented container house added - so 3 families squashed into one. And people bemoan high density - it's already been happening on the down-low for years! Just illegally
Granny flats are not minor dwellings, they cant be rented out to non-family members. It looks like the Govt is going to implement the Christchurch "family flat" model nationwide.
https://ccc.govt.nz/consents-and-licences/resource-consents/resource-co…
That are consulting on minor residential units ‘MRU’s. Not ‘granny flats’.
I wish they would call it that then, as its confusing. And they keep saying its for extended families.
Willis made it quite clear they could be tenanted on breakfast. Why do councils care if the occupant is related or not?
Yes, poor choice of words by the Govt. because 'Granny Flats' does have a quasi-legal definition as something that can only be used by family and a more general definition as anything from a shed/tiny house to a fully code-compliant one-bedroom house.
Perhaps rent growth will slow down a bit when interest rates start falling?? But that might be a while away……
Landlords without mortgages will be doing very nicely right now. Yields are pretty damned good.
TTP
"Yields are pretty damned good" - really? You'd get at least double in a TD!
Term Deposits are for people who do not know how to invest for profit.
they are ok if you want to lock it away and not have to do anything, but personally find that rather boring.
Say you are getting 6% p.a. Less tax and you are getting approx. 4%, so you are losing spending power with inflation etc.
There are far more lucrative and just as safe ways to make $ than TD’s.
All you are doing with Term Deposits is aiding the Housing Market as that money is lent out as mortgages and the Banks are making money on your money.
I am not saying TDs are great, just that they are currently doing way better than property.
"Landlords without mortgages" also pay tax. They get maybe 3% p.a. - rates - insurance - maintenance - tax. Without the capital gains component it is a terrible investment.
Personally dont agree with you that TD’s are better than property from my years of experience.
Yes if you bought a property and it has declined in value significantly then you will be correct, however that is not the case throughout NZ.
Not going to go into financial details in here, however I can assure you that there is alot of $ being made on property by many investors and others that deal in property.
Unfortunately the Auckland market was a market increased unrealistically by overseas money, but most of us knew that.
Sure there was a lot of money being made. But I was responding to the comment that “yields are pretty good” which is simply not true right now, even compared to term deposits. So unless you can see capital gains on the horizon, why stay in property? Kodak shares were a good investment at one time too.
It depends if you consider a 40% per annum return on purchase price a good return?
20% for 6 months is easily achievable!
Are you saying that because NZF promised it pre election (as if they intend to do anything they promise!), or is there actually some progress on this?
Edit: Oh I see it now! "Bishop said removing "regulatory red tape" would not only speed up the build process, but was also estimated to save up to $6500 in the standard building and resource consenting fees per build alone." - wow that $6500 must hold back so many builds...
"don't worry help is on the way soon there will be hundreds of granny flats put on the back of sections and that will put downward pressure on rents"
Don't knock it.
Why?
Because it probably will!
I am surprised that the average rent is only up $25 over the past year?
ChCh is up $40 which isnt surprising due to its popularity and quality of living.
Most of ours and other investors I know have raised rents more than the $40 they suggest and even that wouldnt cover the increases of insurance, rates , interest etc.
Nothing surer is that rents will climb as costs increase for landlords.
Not surprising at all.
Rental supply has been soaring in many locations. Plus during cost of living crises people tend to adapt by doing things such as returning to live at home, more room sharing in rentals etc etc
Demand in Chch is huge for rental accommodation at the moment and it has been for years.
Landlords need to screen them all as there are many that you would not want as tenants.
landlords can afford to be very choosey at the moment in ChCh.
Tenants know that they are better off currently renting accommodation than buying, due to the stringent borrowing restrictions due to Bank criteria.
My new Torbay neighbour pays rent more than my mortgage, feel sorry for him
Once you add on insurance, rates ,r&m...he probably pays less than you overall. Still feel sorry for him?
No, you don't.
Every comment you've posted, and I have read, confirms this.
Or are you saying ... You've had a revelation?
;-)
The only reason I have to raise rents is to cover rates (increase about $400) and insurance (increase about $250) which is about $15pw otherwise going backwards. When will councils and insurance companies come to their senses and back to earth?
If a landlord, homeowner or tenant is paying the bill, they don't have to.
Mypointis: The only reason I have to raise rents is to cover rates (increase about $400) and insurance (increase about $250) which is about $15pw otherwise going backwards. When will councils and insurance companies come to their senses and back to earth?"
Pa1nter: "If a landlord, homeowner or tenant is paying the bill, they don't have to." (posted at 19th Jun 24, 10:24am)
Can someone help me?
What is the Pa1nter saying?
He gets lots of 'thumbs ups'.
So he must be right? Surely?
What has he said?
Until we get a massive increase in supply, the rental market is set at renters’ ability to pay. Nothing more, nothing less
If landlords had pricing power as many believe, then highly leveraged property investors renting out in the long term rental market would be cashflow positive, and not requiring any top ups.
Property investors have been misinformed to believe that they operate in a genuine cost plus pricing environment. Under those conditions, they could pass on the costs of higher rates, higher insurance, higher financing costs and other rising costs due to inflation.
Instead property investors are complaining about rising costs of insurance, rates, etc, adversely impacting cashflow and profitability.
https://www.rnz.co.nz/news/national/519788/rental-listings-up-40-percen…
I can assure that if you have good tenants that don't cause any issues and pay their rent on time, they will probably be paying well below market, and definitely well below what they could afford to pay.
But not what the bond data says though, is it?
Or perhaps - as J.C. says (he's not wrong) - prices are set at the periphery - and therefore - this is what every tenant should be paying?
Bond data are new tenancies. Legacy tenancies involving good tenants would be an interesting comparison.
Not sure about that?
if your current tenant can not afford to pay any increase then they will need to find another property that is more their budget.
Ww have had very few that move on due to increase in rent over the years.
So rents have stopped climbing since National was elected. Quelle suprise!
They never really did rise more than inflation, despite massive changes to interest rates and tax rules. Landlords cannot pass on their costs, Quelle suprise!
Hi Greg, please add the median household income for each region and the rent/income ratio & then we can see how truly screwed up NZ is.
It would be useful for Interest.co.nz to maintain that data set with the other housing indicators.
Infometrics provides average rent/average household income which shows rents to be the most unaffordable for their whole data series since 2000.
https://rep.infometrics.co.nz/new-zealand/living-standards/rent-afforda…
From a 2021 MSD paper
60% of low-income private renters (Q1) are in households that spend more than 40% of their income on rent, the highest rate in the OECD
"From a 2021 MSD paper
60% of low-income private renters (Q1) are in households that spend more than 40% of their income on rent, the highest rate in the OECD"
Very interesting.
Can you share the link please. Thank you in advance.
Is that before or after the Govt gives them a ton of money back in the form of the Accommodation Supplement and Working for Families?
https://view.officeapps.live.com/op/view.aspx?src=https%3A%2F%2Fwww.msd…
The quote is from page 7: "60% of low-income private renters (Q1) are in households that spend more than 40% of their income on rent, the highest rate in the OECD"
The report is also referenced here.
https://www.privacy.org.nz/assets/New-order/Resources-/Publications/Ins…
So all this stuff about rents rising more than inflation due to Labour's tax changes was just National Party lies?
"So all this stuff about rents rising more than inflation due to Labour's tax changes was just National Party lies"
In a democracy, in order to win at the next popularity contest, the parties in opposition attempts to discredit the parties and their policies in government in order to persuade voters at the next popularity contest. Picture a boxing match with each competitor constantly trying to get jabs at their opponent.
There is a lot of political rhetoric and debate. Politicians are mass debaters and masters of public relations. There may be some merit in some points / perspectives raised but many times there aren’t as the main goal is to score political points with their audience (i.e voters). Ask a difficult and uncomfortable question and the usual public communication strategies are employed in their response.
Then when the previous opposition party gets into power, they blame the previous government.
This is the nature of the game of politics.
The only comeback against politicians deceiving voters is you can vote them out in three years time. We really need to look into some sort of consumer guarantees act, or at least a code of conduct for politicians. Otherwise, why would they tell us the truth about anything? Imagine if business was allowed to act the same way?
I can't remember anyone going on about Labour making promises in the election campaign that were obviously deceitful or unlikely to happen.
I have two granny flat rentals. Both ideal homes at reasonable market rents.
Are you expecting capital gains? Or is the rental yield decent enough compared to other investments?
I have granny flat esque rentals. The net yields are better than term deposits. The consenting took a lot of time and stress
Are you factoring in the fifty year building life, repaint every ten years, plumbing fifteen to twenty years etc. Having to deal with tenants in your back yard.
So landlords are not price setters unless there is a supply shortage?
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.