Good news for tenants as rents plateau

Good news for tenants as rents plateau

It is a good time to be a tenant according to Trade Me Property’s September report on median rents across New Zealand.

Head of Trade Me Property Nigel Jeffries said the cost of renting a property has remained steady, with median asking rent up just $20 a week compared to the same time last year. “When we compare the cost of renting to the unyielding climb in house prices, the housing game has stayed firmly in favour of renters. The average property across the country is being let for $420 per week, the same rent as March this year and up only $20 per week on the same time last year.”

Excluding Auckland, median asking rents ticked up 2.9 per cent to $360 per week, and were up 20 per cent compared to September 2010.

Auckland rents just shy of $500 a week

Median asking rents in Auckland refused to surpass $500 per week, on the cusp at $499 per week for the second month in a row. “While we’re yet to see average weekly rents break through the $500 per week ceiling, this still represents a nine per cent increase on September last year and has added more than $2,000 in annual rent costs for a typical Auckland tenant,” Mr Jeffries said.

“Meanwhile the expected selling price of an Auckland property has increased by almost $128,000 over the same period, making it more difficult to get on the property ladder and putting pressure on new landlords to recoup their costs.”

Between September 2010 and September 2015, median weekly rents have risen almost 30 per cent in Auckland, adding just under $6,000 a year to the cost of renting a typical property across the city.

Christchurch and Wellington market weaken as Auckland continues to climb

A typical Christchurch renter saved $1,560 in the year to September following a 6.5 per cent fall in median asking rent to $430 per week. “Over the past five years, rents in the Garden City have risen by almost 39 per cent with the largest component of that occurring between 2011 and 2014 during the rebuild,” Mr Jeffries said. “That growth topped out in March this year at $495 per week, but has cooled down a lot over the past six months.”

He said the Wellington and Auckland rental markets were “chalk and cheese”, with median asking rents in Wellington up only 2.7 per cent on the same period five years ago. The median asking rent in the capital was $380 per week in September 2015, inching up $5 per week on September 2014 and up just $10 per week when compared to September 2010.

“The most interesting aspect of the rental market in Wellington outside of this modest rise is the seasonal peak in January. This spike sees asking rents boost to align with the beginning of the university year, but that increase generally tails off within two to three months.”

Ups, downs and plateaus in the regions

Excluding Auckland, median asking rents around the country remained relatively stable for the fifth month in a row, up 2.9 per cent to $360 per week.

Across the regions, three areas saw a drop in asking rents with Gisborne and the West Coast down 17.6 per cent and 9.3 per cent respectively. “Given the relatively small number of rentals available here, these regions don’t have a huge effect on the rest of the country, but it’s obviously still positive news for prospective tenants in these areas,” Mr Jeffries said.

“On the other hand, we suspect rising rents in Waikato and Bay of Plenty are seeing a step-up in activity as a result of ‘the Auckland effect’. This affects demand for rentals, as we’ve seen the number of available properties dry up over the past two years as people look to escape the tougher Auckland market.”

Over the past two years, Waikato saw available rental properties drop to an average of 900 listings per month in the 12 months to September 2015, down from 1,200 in the 12 months to September 2013. Rents rose by 13 per cent over that same time period, adding over $2,000 a year to the cost of renting.

In the Bay of Plenty, the past two years saw a similar decline in rental listings, from an average of over 1,000 per month in the 12 months to September 2013, to 700 listings per month in the 12 months to September 2015. Rents rose 17 per cent over that period, adding $2,750 a year to the annual cost of renting.

A shift in focus to medium-sized houses

Mr Jeffries said the “hot spot” of the rental market has shifted from 1-2 bedroom properties to 3-4 bedrooms. “Across the nation we saw a lift in weekly rents for medium-sized houses, up three per cent on last year to $465 per week, compared to a lift just shy of two per cent for small houses. Excluding Auckland, the cost of renting a small house hasn’t changed when compared to the same time last year, still at $280 per week.”

In the Bay of Plenty, the average rent for a 3-4 bedroom house topped $400 per week in September, representing a record rise of 14.3 per cent over the past year. “This hefty lift beats out Auckland which had an eight per cent rise over the same period for medium-sized houses. Excluding Auckland, that lift helped push asking rents up five per cent for medium-sized houses across the rest of the country.”

Table 1: Median weekly rent by property size & region: Sep 2015 vs Sep 2014

Aucklanders see urban living rents continue to rise

The cost of renting an apartment in Auckland increased 9.8 per cent on September 2014, now at $450 per week and adding over $2,000 to the annual rent bill. “Apartments are the core of the urban rental market in Auckland, and we’re continuing to see costs of inner city living increase,” Mr Jeffries said. “At the same time, the cost of renting a unit set a new high of $400 per week. That’s a rise of eight per cent year on year, adding over $1,500 to the annual cost of renting, so it’s not getting any easier for urban dwellers.”

Table 2: Median weekly rent by property type & region: Sep 2015 vs Sep 2014

ENDS

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