Christchurch drives nationwide rental increase of 6 per cent

11 November 2014

Christchurch drives nationwide rental increase of 6 per cent

The median weekly cost to rent a house in New Zealand has risen more than 6 per cent on a year ago, according to the first edition of the Trade Me Property Rental price Index released this morning. The median weekly rent was $399, up from $375 in October 2013.

Head of Trade Me Property Nigel Jeffries said the increase was underpinned by the “scorching” rental market in Christchurch where median weekly rents have soared 20 per cent year-on-year to a new record high of $510 per week. A month ago the weekly rent was $465 per week and a year ago it was $425 per week.

“With 12,000 houses removed from the city and an influx of workers moving in for the rebuild, the rental market remains under pressure in Christchurch,” he said. “As new property developments emerge and residential repair work is completed we’d expect to see things settle down – but it hasn’t yet.”

The new Index measures trends in rents for all properties rented through Trade Me Property by private landlords and property managers in October. It provides tenants, landlords and property managers with information about the rental market across the country by property size, type and region.

Mr Jeffries said the rate of increase in rents across New Zealand had been steep over the past three months. “In August, September and October we’ve seen median rents all breach the six per cent mark, with September up 7.8 per cent year-on-year. Rents look to be rising faster property asking prices, which indicates things are tightening up for tenants.”

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Around the grounds: up, down, and static
Six regions saw year-on-year median rent increases, six were down, and three were unchanged.

Auckland remained “reasonably stable” with a year-on-year increase in median weekly rent of 2 per cent ($460 per week) and Mr Jeffries said this modest rate of annual increase has been consistent over the past six months. The Auckland rental market is dominated by 3 and 4-bedroom houses which saw a 5 per cent increase.

The increase in weekly rents in Wellington was strong, up 9.5 per cent on a year ago. Mr Jeffries said the increase was across the board in the capital, with the largest homes attracting now $700 a week and up 27 per cent compared with October 2013.

Leading all regions on the increase front was Taranaki where the median weekly jumped 23 per cent compared to a year ago, landing at record high of $370 per week. “Taranaki is experiencing something of a mini boom off the back of the energy sector in New Plymouth,” Mr Jeffries said. “We’ve seen strong price inflation in property asking prices in the region too.”

He said it was no surprise to see Canterbury median rents increase significantly, given the market is dominated by rental activity in the Christchurch metropolitan area. Across the region there was a 22 per cent rise.

Manawatu/Wanganui delivered the largest fall in median weekly rent, down 11 per cent in the continuation of a trend that began at the start of the year. “Wanganui has had some bad press from economists and commentators, but if you’re a tenant it is good place to be if you want to tighten your belt,” Mr Jeffries said.

Medium-sized properties driving increase
The inflationary pressure on median rents is strongest for medium-sized properties, with rents up close to 10 per cent year-on-year.

Table 1: Median weekly rent by property size & region

Apartment market still strong
Mr Jeffries said the rental market for apartments remained strong, with record highs in weekly rents in Auckland (up nearly 9 per cent to $430) and Christchurch (up 29 per cent to $452).

Mirroring the negligible growth in median weekly rents for small houses, the rental market for units is the weakest segment with rent levels unchanged at $300 per week. Units in Wellington and Christchurch buck this trend, and were up by more than 7 per cent year-on-year.

Table 1: Median weekly rent by property type & region

Long-term trend
Looking at the trend over the past five years, Mr Jeffries said most significant rises in median weekly rents had come in the past two years. “Tenants were paying a median weekly rent of $360 a week at the end of 2012, and now they’re having to dig out another $40 more each week.”

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About the Trade Me Property Rental Price Index:
• The Index provides a timely and comprehensive monthly insight into the New Zealand rental market. It covers trends in rents by type and size of property across New Zealand.
• It is produced from data on properties rented in the month by both property managers and private landlords.
• It is calculated based on median rent.

trademe.co.nz/property/price-index/for-rent

ENDS

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