TradeMe data suggests landlords are dropping rents to attract tenants but housing unaffordability remains at record levels in many cities and regions

There was some good news this week. Residential rents around New Zealand have fallen 2.3% over the past year with a record number of properties listed on TradeMe.

It caught my eye because the house next door to my Wellington rental has been sitting vacant for a few weeks now, despite having a fresh lick of paint and a professional listing agent.

This feels like a far cry from when I was searching for a flat in 2021. Back then, most rentals were being snapped up within 48 hours of the first crowded viewing. When we did find a tolerable place, we wrote a grovelling application letter begging to be allowed to rent it.

But times have changed, the latest figures from TradeMe show the number of  residential properties available to rent in March was up 41% from last year.

Rental prices have fallen 2.3% year-on-year nationwide which should save households almost $800 per year. There were particularly sharp falls in the Hawke's Bay and Taranaki.

This data relates only to new property listings on Trade Me. Overall rents rose 3.7% in the year to March, according to Statistics NZ, which includes both new and existing tenancies.

Trade Me’s data is considered a more timely indicator of market conditions, as it reflects asking rents for new listings, while Stats NZ’s figures lag due to the slower repricing of existing tenancies.

Falling like a feather

Even so, rent price inflation in Stats NZ data was the slowest since 2021 and appears to be trending downwards with these leading indicators.

Gavin Lloyd, a property director at TradeMe, said renters should feel “empowered” as they have more negotiating power than they have had in years. 

RNZ reported some Auckland landlords were offering prospective renters grocery vouchers or a free week to sweeten the deal.

Sarina Gibbon, from the Auckland Property Investors' Association, told Newstalk ZB this showed how “out of line” with the market some landlords' rent expectations were. 

After decades of only going up, there are a number of demand headwinds and supply tailwinds which are suppressing rents and even beginning to drive them lower. 

A tough job market and general economic weakness has significantly slowed wage growth which limits the scope for rent increases. 

Plus, net migration has fallen from a record high of 128,000 in 2023 to an unusually low rate of just 27,000 in 2024. This was driven by fewer arrivals, but also an increased number of departures.

Some in the property industry say the glut of rentals may be due to owners holding off selling in a weak market and choosing to rent out their properties instead, adding to supply

But most importantly, New Zealand has been building houses at a rapid pace. Completion data from Auckland Council suggests about 1450 new dwellings are being finished a month. 

That’s still a strong number but it is down from 1600 in the middle of last year, and from almost 2000 for a few months in late 2023. 

Other cities don’t publish housing completion data but consents tell a similar story. There was a boom in 2020–2022, which has been trailing off as interest rates crushed the economy. 

Keep pushing

There isn’t any guarantee the conditions that have been easing rents will continue, and even as rents begin to fall or level off, housing remains deeply unaffordable. 

CoreLogic NZ chief property economist Kelvin Davidson said the rent-to-income ratio has held at a record 28% for the past three years.

“The affordability equation for renters hasn’t improved in the same way as for buyers. Many tenants are already stretched, and this limits landlords' ability to raise rents further,” he said. 

Some lower-income families are also likely paying typical median rents, meaning housing may be even less affordable than headline figures suggest.

It may come as a surprise that rents in New Zealand’s two largest cities are now more affordable than in the rest of the country. According to CoreLogic, Aucklanders spend 25% of their income on rent, while Wellingtonians spend just 23%.

Stuart Donovan, an urban economist at Motu, says it looks as though the housing affordability crisis has spilled over from the cities and into smaller centres. Places such as Whangarei, Rotorua, and New Plymouth have rent-to-income ratios above 30%.

Housing Minister Chris Bishop celebrated the downtick in rents in a social media post this week. It is critical that he implements his housing reforms quickly to keep the downward pressure on rents — instead of on renters.