Kiwis paying $1000 more a year to rent

Kiwis paying $1000 more a year to rent

The median weekly rent across New Zealand continued to climb steadily in the year to May, but growth was slower than last month according to the latest Trade Me Property Rental Index.

Head of Trade Me Property Nigel Jeffries said the median weekly rent increased 4.8 per cent over the year to land at $440 in May. “Kiwi tenants are having to dig deeper – typically their rental property is costing them $1000 more per annum than it was a year ago. Markets like Auckland, the Bay of Plenty, Waikato and Northland are all experiencing very strong demand for rental properties.”

He said Auckland was New Zealand’s most expensive region, with a median rent of $520 per week. “Renting a typical property in Auckland will set you back more than $27,000 a year, that’s up $1,500 since May last year and a hefty $5,000 increase since May 2011.”

Excluding the City of Sails, the rental market is also strong, with the median weekly rent at $380, and up 5.6 per cent compared to last year.

Christchurch market continues to weaken

One metropolitan area of the country not experiencing a steady rise in rents is Christchurch which continues its significant downward trend in rents over the last 12 months.

Mr Jeffries said that the Garden City’s rents began their downward slide a year ago. “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 per cent 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.”

Across the rest of the country tenants continue to experience significant rises in weekly rents compared to May 2015. Leading the charge was Otago’s increase of 16.7 per cent, to a median weekly rent of $350. Mr Jeffries said this meant tenants were paying $50 more each week. “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.”

The rental market’s version of the ‘halo effect’ continues in areas surrounding Auckland. The Bay of Plenty rose 8.8 per cent to $400 a week, where it has been stuck for the past 4 months. The Waikato similarly saw a 7.5 per cent increase in median rent to $360 a week, and Northland increased by 4.9 per cent to a weekly rent of $420.

Canterbury’s declining rent was heavily influenced by the weak Christchurch market, and Gisborne’s median rent was down 7.4 per cent to $250 a week.

Small houses proving the most popular

Small houses (1-2 bedrooms) had the greatest increases in median weekly rents as tenants sought 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 rose 4.5 per cent across New Zealand in the past year to $350 per week, underpinned by Auckland’s new record high of $430 a week.

While smaller properties are rising far above the overall median, the larger houses (5+ bedrooms) are witnessing a much weaker market. Both Wellington and Christchurch saw annual falls in weekly rents, as Auckland properties ticked up almost 4 per cent to $790 per week.

Table 1: Median weekly rent by property size & region: May 2016 vs May 2015

Units in demand

Mr Jeffries said that the median weekly rent for the “humble unit” was not breaking records around the country, but was still outstripping other urban properties. Both Auckland and Wellington saw median weekly rents for units rise 5.1 per cent in the past year, up to $410 and $310 a week respectively.

Table 2: Median weekly rent by property type & region: May 2016 vs May 2015

ENDS

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