Renters throughout the country are paying around $1000 a year more than they did a year ago.
Trade Me Property figures show the country’s median weekly rent has increased by 4.8% to $440 over the year to May, while the median weekly rent in Auckland is up 6.1% to $520.
Head of Trade Me Property Nigel Jeffries says: “Renting a typical property in Auckland will set you back more than $27,000 a year, that’s up $1500 since May last year and a hefty $5000 increase since May 2011.”
The rental market’s version of the ‘halo effect’ is also continuing in areas surrounding Auckland.
Rents in the Bay of Plenty have risen 8.8% to $400 a week, where it has been stuck for the past 4 months. The Waikato has seen a 7.5% increase to $360 a week, and Northland a 4.9% rise to $420.
However, it's a different story in Christchurch, where weekly rents have fallen 9.1% over the year.
“Christchurch’s rent adjustment after the peak of the rebuild began in May 2015 when we saw the median weekly rent fall more than 2% year-on-year. We’re still seeing that adjustment as supply strengthens, pushing the median weekly rent down to $400 a week, and back to where it was three years ago,” Jeffries says.
Across the rest of the country tenants continue to experience significant rises in weekly rents compared to May 2015.
Leading the charge is Otago’s increase of 16.7%, to a median weekly rent of $350, which equates to around $50 a week more than the previous year.
“It’s still below the peak rents we see in the region though – these tend to emerge in August when the seasonal winter demand kicks in,” Jeffries says.
Trade Me Property notes small houses (1-2 bedrooms) have experienced the greatest increases in median weekly rents as tenants seek to manage their housing costs at the same time as investors pile into smaller properties at affordable prices.
The weekly rent for a small house has risen 4.5% across New Zealand in the past year to $350, underpinned by Auckland’s new record high of $430 a week.
Meanwhile larger houses (5+ bedrooms) are witnessing a much weaker market. Both Wellington and Christchurch have seen annual falls in weekly rents, as Auckland properties have ticked up almost 4% to $790 per week.
Jeffries says that the median weekly rent for the “humble unit” is not breaking records around the country, but is still outstripping other urban properties. Both Auckland and Wellington have seen median weekly rents for units rise 5.1% in the past year, up to $410 and $310 a week respectively.
45 Comments
Neatly 'splained by a leaflet dropped in by a local property firm just yesterday:
- Changes to insulation, heating etc rules will see more $ needed for these especially in older houses.
- Recent court ruling that sees landlords now responsible for repairs resulting from tenants' "accidental" damage. Prediction: all tenants will claim all damage "accidental", landlords will purchase expensive insurance to cover this likelihood.
- Compliance costs and increased pressure on landlords will see massive move from DIY PM to managed property regimes (90% coverage in Oz). The extra 10-15% ticket-clip will be cheerfully swallowed by landlords - oh - wait....
There was another one but advancing age and the screams of Interest electrons, tortured enough already, compel me to [omit] it.
Shortage of Stock
Not so in Auckland so much as high prices, but very true in Wellington, Hamilton and Tauranga. Otago is mostly noise due to the special nature of renting down there.
http://listings.jonette.co.nz/blog/rental-vacancies-moving.html
I wish I had time to go back over all the old posts with so many comments saying "rents can't rise..", "rents can't go up unless incomes do". It was an absurd position to be stating that even though house prices are rising rents won't follow.
My concern is incomes! Incomes aren't rising much (excluding construction and related sectors) so higher rents means less disposable income, or worse, less/no income left over for essentials.
These rent increases were so obviously predictable. No one should be surprised.
yes that is the concern as rents outstrip wages then less is avaliable to be spent on consumables and the local economy goes backwards.
buts that alright we can top that spend up by bringing in more immigrants who will need to spend up large when they arrive to set themselves up
not my idea of a well run economy
The price of land in Auckland is higher than Sydney, thanks to the Auckland councils inane land supply restrictions. Therefore the value of rent in Auckland needs to climb higher than Sydney, before we can expect building rates sufficient to cater to demand and ease our building shortage.
Is it likely that having rents in Auckland higher than Sydney is conducive in the long-term to tenancy by business? Hell no. When the current property boom ends we are likely to see an exodus of corporates from Auckland, because - unlike Brisbane, Melbourne, Sydney, Tauranga, Silverdale - the City of Auckland has a very weak construction sector.
Auckland Council is adding an excessive amount of new infrastructure and finding very little difficulty to do so. Auckland Council has taken the decision to spend the equivalent of 75% of a typical infrastructure budget on developing Warkworth, Silverdale, Kumeu, Clarks Beach and Pukekohe. But has decided to halve the spend on Auckland. End result is we are getting 50% the bang for 125% of the buck.
We could save rate payers lots of money and accommodate way more growth
Rent in time to come will move up to reflect the current high house price. If the average house is million than assuming return of 4% so should be appox $40000 plus $5000 to cover rates and insurance. So average weekly rent will easily be $865.
First home buyer who now cannot afford to buy house ( by choice as per JK) in future will not be able to afford rent also. Will than be welcome to stay in Car or may be will buy Van for extra luxary under national government and if national still in power will come and say that living in Car is also by choice as more flexiability.
Well, looks like it is Open season again on landlords ... and half brained commentator on this subject should do a bit of research and they will find out that the costs of running a rental increases by almost $1000 a year and that goes to rates, CPI, insurance, PM, "small' regular maintenance and services to the property ( does not include any changes in Interest rates) ....the "tenants" and most of their advocates want to be
immune to all these costs and not pay as they go.... By the way, all these costs DO OT GO in the landlords pocket ...it does oil the economy though.
When will everyone start having a mature conversation about this ( and house prices) rather than moaning like teens who still need to be spoon fed.
Oh, has any body thought what will happen if Landlords throw in the towel and gave up the hastle of their business ... how many homeless people will there be ...maybe enough for all TV stations to cover them 24/7....
Financial illiteracy is a big problem and yelling at each other wont solve the issue
@Eco Bird
What is scary is that:
1. You are serious and believe this nonsense
2. You are only one of many....
If landlords throw in the towel then a load of houses come onto the market, and maybe many would be bought by those actually wanting a HOME.
To say there would be more homelessness is absolutely unadulterated BS.
If you want to be landlord and make some money, or provide for your retirement then fair enough - BUT to perpetuate this nonsense you provide a social service is hilarious. Who are you trying to convince?
And I own a rental property...
evita, I think we will see more people in cars and vans if labour/Green come to power (heaven Forbid) ... their rusty outdated social policies will do much more damage than repair ... the Nats are not perfect , but who is? .. however, I guess in most of the cases they are at least Fair ....
Looking forward to some government or other to re-establish order and put people and their having homes to live in first, as opposed to just a roof over their head, especially if that is a car roof. National has led us to the most spectacularly bad situation where housing goes that I, certainly, have ever seen. Their mismanagement is monumental and will not be easy to rectify, and it will have to be started to be done at some point.
how do you know what they would have done, "as it never happened".
we can only question what the current government is doing and how we disagree with the direction they are taking us as that is happening now not some thing that may or may not happen in someones mind
I understand that opposition is not strong but need of the hour is that national should go as have become arrogant n can be seen from the absolute rubbish insensitive comment comming from them.
Do not want to act on housing crisis is not as annoying as denial and lie from them. This happen when one is so arrogent that feels everyone is stupid with no brain and will not understand but they do not understand that are totaly exposed.
According to Stats NZ last quarterly CPI figures rents have risen 'only' 2.3 percent nationally and 3.2 percent in Auckland. I assume the trade me figures are asking rents only, not actual. Bottom line if the number of properties being acquired are for rental have increased to 45 percent in Auckland , alongside the rising cost of purchasing those rentals, there is a reasonably logical reason why median rents have actually risen .Furthermore it truly shows that when Auckland house prices start to fall those savvy investors, without sustainable yields will be looking to offload all at the same time . Sounding more like Dublin every day.
Not exactly like Dublin, Dublin built a lot during its property boom so after the correction it was a town with low rental costs and was able to maintain that competitive edge over neighbouring towns.
Auckland's property boom is mostly notable for its lack of building, so after the next correction Auckland will non-competitive with other regional cities all of which are building faster.
However, it's a different story in Christchurch, where weekly rents have fallen 9.1% over the year.
I believe this deflation is skewed towards the larger houses or less desirable areas. I'm looking for a 2 bedroom rental and don't see any significant change. A lot of couples are flatting with strangers and demand smaller dwellings to escape that situation. There is a lack of quality small dwellings not aimed at retirees. Then you've got the damaged eastern suburbs nobody wants to live in.
Just checked TradeMe - lists 753 one and two bedroom rentals in Christchurch. If you check the breakdown larger homes have dropped 13.8%, while one and two bedroom only 7.9%. The broken homes in the east I thought were "bargains" for investors a few months ago.....
The irony for me as a landlord is that bringing my houses up to full insulation is a cost I will pass on to my tenants while the house I live in has no insulation either.
If your house is cold you where more clothes. My kids grew up, went to university, are productive citizens and all without insulation. Go Figure.
Making laws for house standards takes away the tenants choice to pay a cheaper rent for a cheaper house.
I am constantly amazed how the hippy generation sold out. The enlightening wasn't quite enough, they all joined the greedy rentier class and are at the heart of sucking the country dry with their unearned income. You say productive? Only about 1:20 people in this country actually produce something.
So more tax payer dollars going to prop up rental prices; increased tax break for lords of the land because their costs have gone up. Renters who can't presently buy have savings cut into and if they're not saving their net income is reduced - shafting the local economy.
Which set of forward thinking geniuses came up with this scenario, waved their collective willies and said let it be so?
Zeds are Us .....great comment !
When will landlords realise the taxpayer (whether a renter or not) is not just a "cash cow.....as far as Im concerned why should my tax dollars be pumped into the landlords pocket .......and ultimately the banks ....but that ones another story......
Liars, dam liars, and statisticians. Firstly lets re work Otago after you take out central Otago.
Secondly Trade me needs to show the numbers that get advertised and compare that with the existing stock. (number of private rentals in each area). They have the addresses of the properties so why not show increases in asking rent based on actual repeated advertising of the same property.
Third they would not have the foggiest idea of what the existing rents are for long term enduring tenancies. MBIE who publish rents from lodged bonds have the same problem.
i have also published adverts compared to stock and regularly update it eg http://listings.jonette.co.nz/blog/investing-in-ak-or-hn-now.html
Interesting about the overall rental decreases in Christchurch. In certain sectors I know for a fact that rents have gone up in the last year. That is to say nicely renovated smaller dwellings in some popular under-supplied areas. Yet long-term landlord favourite areas like Burnside have been quite weak for the past year, especially the older, bigger dwellings with definite over-supply that will result in disillusioned landlords selling out.
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