Residential rents appear to be flattening out after a period of steady growth last year.
According to the latest bond data from Tenancy Services, the national median rent for newly tenanted properties was $600 a week in May this year, up by $30 a week (5.3%) from May last year.
However all of that increase occurred in the second half of last year. The national median rent hit $600 a week in December last year, staying there ever since, apart from January when it briefly popped up to $608 a week before dropping back to $600 in February.
As the graph below shows there were substantial rent increases in the second half of 2021, followed by a period of relative stability in 2022, before steadily rising in 2023 and then fattening out again in 2024.
While the number of properties being newly tenanted is following the usual seasonal trends, peaking at the beginning and middle of the year, on an annual basis they also appear to be flatlining, with 11,748 bonds lodged in May this year, up by just 60 (0.5%) compared to May last year.
That suggests the balance between supply and demand for rental properties may be in relative equilibrium for the time being.
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6 Comments
Investors can now buy existing properties for lower prices and obtain higher rental yields than when they were forced to buy overpriced brand new properties. There are now a lot more older, and thus cheaper properties on the rental market instead of expensive new builds (which are piling up unsold on the market). This will bring down rents over time. Not so great for developers looking to offload their slummy shoeboxes to what they thought were captive investors though.
Investors will also be looking to buy older houses on sections to which they can add a minor dwelling under the new rules. These new small homes will also bring down rents over time. There is no ability to value add or increase rental yields over time if you buy a 70 sqm townhouse with only enough land to store your rubbish bins.
ABSURD. A 5.3% increase in rent forced on the poorest in society by successive govts bad policies.
NZ already has one of the highest rent/income ratios in the OECD.
And we have 100,000 homeless in NZ (wide HUD definition from truly homeless to cramped into unsatisfactory dwellings), that's 2% of the population.
We are circa 25,000 short of social houses & circa 1,500 in emergency housing.
IT IS A CRISIS.
National's zoning of 30 years land will help but only in the long term. The change in zoning to allow granny flats will help.
However, we need to:
a) reduce the immigration rate to something sustainable
b) bring in as many temporary houses/cabins/granny flats/prefabs as possible until the permanent social and private houses are built.
c) provide sufficient funding to Kianga Ora and the community providers to get the houses built (the govt is stuffing around with KO while the country burns)
Not far from your mortgage payment, but you also pay rates, home insurance and maintenance on top of that which would add a few hundred a week over the long run. Plus you likely have $100k+ of capital, possibly much more, sunk in the house with the associated opportunity costs (something like another $100 per week for every 100k).
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