By Greg Ninness
The rental housing market took a slight dip in April, although rents remain well up on a year ago in most places around the country.
The residential rental market is usually a but quieter in April, with many renters such as students and people relocating for work or business generally getting their new arrangements sorted in the first quarter of the year.
That pattern held true this year with the Tenancy Services arm of the Ministry of Business Innovation and Employment (MBIE) receiving 10,713 tenancy bonds in April, down from 15,379 in March and 11,099 in February, but little changed form the 10,630 bonds that were received in April last year.
The median rent for all new tenancies across the country held steady at its all time high of $400 a week for the third month in a row, up from $380 a week (+5.3%) compared to April last year (see table below).
Within the Auckland region, the median rent hit a record high of $490 a week in Waitakere, an increase of 8.9% compared to April last year when it was $450 a week.
Wellington City's median rent also climbed to a new high of $500 a week in April, up by $55 (+12.4%) a week compared to April last year. and up by $68 (+15.7%) a week compared to April 2015.
But rents continue to decline in Christchurch where the median rent in April remained at $380 a week for the second month in a row, down from $390 a week in April last year and $395 a week in April 2015.
In the apartment market, there have been particularly strong increases in the median rents for two bedroom apartments in both Auckland and Wellington.
In Auckland the median rent for two bedroom apartments increased from $500 a week in April last year to $550 a week in April this year (+10%), and in Wellington City the median rent for two bedroom apartments increased from $470 a week to $540 a week over the same period (+14.9%) - see table below.
14 Comments
This is actually the sign of high immigration. In particular I believe this reflects many of the net increase in students studying in New Zealand. If the boom in house prices had been driven totally by immigration rentals would have also doubled. What I believe we have seen is immigration driving more people per house, and Auckland has a high capability to absorb more people as it has a vastly higher proportion of large houses in its housing stock relative to (say) Sydney. What I think we are also seeing is a tendency for people to find other options (eg sharing houses) or relocating when rentals go up. In economics this would be 'highly elastic demand' - where small rental price increases results in people find alternatives. The other factor which we are also likely to see is many industries moving out of Auckland because workers can't afford to live there. It remains a mystery to me why the Government hasn't led the process by moving the naval and air force base.
This is actually the sign of high immigration. In particular I believe this reflects many of the net increase in students studying in New Zealand. If the boom in house prices had been driven totally by immigration rentals would have also doubled. What I believe we have seen is immigration driving more people per house, and Auckland has a high capability to absorb more people as it has a vastly higher proportion of large houses in its housing stock relative to (say) Sydney. What I think we are also seeing is a tendency for people to find other options (eg sharing houses) or relocating when rentals go up. In economics this would be 'highly elastic demand' - where small rental price increases results in people find alternatives. The other factor which we are also likely to see is many industries moving out of Auckland because workers can't afford to live there. It remains a mystery to me why the Government hasn't led the process by moving the naval and air force base.
move away from Auckland and watch the recruits dry up, whilst economics makes sense to move the navel base up to marsden point, it wont happen as it would only take about a decade to park most of the fleet as not enough sailors.
maybe national could move it and allow anyone that serves for 5 years to become a citizen
This explains why high immigration levels are needed to sustain economic growth in NZ.
Real wage growth YoY is marginal at best, house rents and other expenses not factored in CPI are also moving upwards at a quicker pace. My best guess is there is no real per capita consumption growth across the country.
So artificially boosting population headcount has to be the quick fix for economic sustenance.
We could also improve labour competitiveness with more training and education, less influx of unskilled migrants to take the lid off wages and bring other reforms, but that, for one, requires political will and decisiveness which this government lacks.
Not really a surprise, inner city apartments are going to be Gold in the short to medium term as our transport infrastructure in Auckland is now third world and there really is no fix possible as adding lanes cannot be completed short of running a second motorway overhead of the first. The ideal is a walk to work or get on a scooter. It will all be fixed in the longer term as we move to electric and will be forced into smaller cars, hence the existing 3 lanes can be made into 4 with a cycle lane/e-cycle lane and an artificial grass track for horses !
As rents increase, you'd think this would be a demotivating factor for many Kiwis - and potentially even migrants - to move to and rent in Auckland. Contrary to the government's admonition that renting will be a good long term option for Kiwis priced out of their own cities' housing market, they'll potentially soon be facing an untenable rental equation too.
How long until we start to see either a marked increase in nationalism, or flight of young talented Kiwis to overseas markets, or a combination of the two?
Nationalism and flight of young kiwis is the way it has been done since the 60s http://www.standard.co.uk/news/london/waitangi-day-hundreds-of-new-zeal…
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.