A rise in the number of homes being advertised for rent while interest from prospective tenants is declining, especially in Auckland, Wellington and Marlborough, has lead to a significant turnaround in the rental property market.
The number of residential properties listed for rent on Trade Me Property hit an all time in May, and was up 12% nationally compared to May last year.
However there were big regional differences in the figures, with Wellington posting the biggest annual increase in listings of 45%, followed by Marlborough 24%, Auckland 16%, Manawatu/Whanganui 5% and Bay of Plenty 3%.
Conversely, listings in Northland, Waikato, Hawke's Bay, Taranaki, Nelson-Tasman, Otago and Southland were down compared to a year ago, while there was no change in Canterbury.
While there were significant regional variations in the number of rental properties listed on Trade Me Property in May, interest from prospective tenants was more uniform, with all regions apart from Canterbury and Southland recording a drop in demand from prospective tenants, as measured by email enquires made regarding specific properties.
Overall, the enquiry level was down 8% nationally in May compared to May 2021, with the biggest declines occurring in Nelson/Tasman of 28%, 19% in Northland, and 15% in Taranaki.
The table below compares the regional trends in new listings to demand enquiries from tenants.
The national median asking rent for all the properties advertised on Trade Me Property declined slightly in May, dropping to $575 a week from the record high of $600 a week in April.
Compared with May last year the median asking rent was up 6.5% nationally, but up just 1.7% for the year in Auckland.
"The combination of increasing supply and dropping demand is going to be interesting going into the next few months," Trade Me Property Sales Director Gavin Lloyd said.
"If this continues, we may well see prices [rents] tumble as landlords look to fill their rentals in a less competitive market."
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Trade Me Property Rental Supply and Demand - % Change by Region - May 2022 Compared to May 2021
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35 Comments
this reflects the data I've been seeing for some time in the hutt valley - if you read to the bottom of this weeks Hutt valley report - you can see my insights into rentals within the region. two key points
1. Number of properties for rent is double this time last year
2. Rental listing prices are starting to fall as a result of the extra supply.
Hutt Valley Market Update 27th June
For those that didn’t see last weeks headlines – 2 lower hutt suburbs – Petone and Alicetown have had the biggest fall in house prices since the peak at the end of last year.
For Petone “considered this time last year” a hot Wellington suburb (think Ponsonby 5 years ago) with most houses selling for 200-300K over their valuation, growth YOY is now just 2% and it’s likely the current average house price of $1.05M will fall below the $1 Million mark before spring.
Current Market Listings
583 houses on the market- Down 11 on last week –whilst lower than in April and May when listed number of houses peaked at 652 houses in early April, there are still 2.5 times the number this time last year when 230 houses were for sale
Based on the REINZ data which showed that 96 sold in Feb and 104 sold in March and 98 in April and 96 in May giving an average sale of 25 houses per week– 583 houses means there is 23.5 weeks stock on the market.
House Price Reductions
312 houses have a listed price
63% of the houses listed with a price have reduced their price since listing
The average markdown has increased to 96K. (last week 91K)
Of those that have listed prices (pool 312) -51 have reduced their prices by 100K
11 have reduced their prices by over 200K, 6 have reduced their prices by 300K and 1 now has reduced their price by 400K with the biggest reduction been 425K (a total 25% reduction)
The data continues to show the majority of houses listed are under 900K. The Median house price for all 583 listings is now 830K. (Down 9K last week)
The latest QV valuations (valuations by QV which are updated every month and give an approximation of a houses value) have dropped $130K since Jan for the Hutt.
In April the QV valuation had dropped 80K – approximately 20K a month since the start of the year but this escalated in May – dropping 50K in one month.
Meanwhile Homes based on last weeks update is inline with QV and indicating there has been an approximate $160K drop on house prices in the Hutt valley– since the peak which they are indicating was early Nov 21. According to homes prices are back to June 21 prices – so flat with this time last year.
Houses sold vs houses removed
My records show 213 houses listed with a Price have sold YTD (up 4 from last week).
I have records of a further 179 houses (up 9 from last week) that have been removed from the market unsold YTD.
28 of those houses removed from the market have been listed on the rental market
Length of time on the Market
- 432 houses have been on the market for over 30 days - 74% (last week it was 430)
- 306 houses have been on the market for over 60 days - 52% (last week it was 311)
- 189 houses have been on the market for over 90 days – 32% (last week was 197)
- 120 houses have been on the market for over 120 days (last week was 121) - 20%
- 77 of the houses have been on the market for over 150 days - 13%
The number of houses on the market over 60 days is now over 50%. This has risen from 32% of houses in mid March (one in three) and just over 1 in 3 houses have now been on the market more than 3 months , almost 1 in 5 have been on the market over 4 months and 1 in 8 have been on the market over 5 months.
The time to sell continues to get longer and longer.
Rental Market
As already noted the rental market has 207 properties for rent (down 8 on last week and 25 from 2 weeks ago) but up 102 on this time last year, – when just 105 houses were for rent. The number of rentals has now doubled on last year
Average rental price reduction is at $51 a week
As noted last week I have also been noting how many properties are listed for rent over $650 a week.
At the moment the percentage of properties listed at $650 is 43% - last week it was 40%. Still well below the 53% of houses listed over $650 on the 23rd March.
Agreed. It’s been fantastic to have your timely data coming in showing a range of trends before we see them in the “offical” stats.
Everyone loves a good news story.
Similar story in the for sale listings. 6 months ago, listings were at their lowest for at least 5 years, for the time of year. Now we are at a 5-year high. Things have changed very quickly.
I have a feeling this is just the beginning... There are a lot of people who are only in it because of the capital gains: now that these have dried up and interest rates are up and rent is going down and is being taxed, surely a fair number will bail. And with no buyers, it could get very interesting (or even economy crippling). The smart ones are exiting now IMO.
My local rental agent has noted phone has stopped ringing and cannot give away (rent) 1-2 bedroom townhouses - Eastern Suburbs and North Shore
You love to see it.
there were always 30,000 empty properties in Auckland -- that if occupied would have cured the rental and housing aspect ( not FHB affordability) of the crisis overnight including significantly reducing rents and possibly capping price rises as returns dropped
Increased mortgage rates and dropping capital values may have forced many of those owners back into the rental market -- instead of simply sitting unoccupied and still earning $3000 A WEEK plus in capital gains ( why put up with those nasty horrible tenants with that sort of return!) Sarc BTW
Instead of all the frittering around on interest relief and SHA's etc -- targetting and taxing the existing 30,000 empty homes could have been a quicker solution to many issues -
No surprise that Auckland and Wellington leading the charge here -- i wonder what the drivers are in Malborough - maybe the slips /floods - or just people letting holiday baches /Air B n B homes go on the longterm market to help service mortgages ?
Exactly.
certainly my monitoring on TradeMe has shown a constant lift in rental listings over the past 1-2 months.
based on this rents should be flattish over the next 12 months. Good for the inflation picture, not so good for landlords under financial stress.
Oh well, I'm sure landlords can just jack up their rents to counteract the flat rental market.
Good luck to them trying that on when there’s so much choice
Some are planning on a 33% rent increase to offset the tax they will have to pay. Apparently they can set the price to whatever they feel like.
Amazing they so generously did not choose simply to have far higher yields in the past.
It'll only work if their rent was previously below market rent.
Hope market rents don't drop - otherwise tenancy tribunal says NO. LOL.
Wow, 45% increase for Wellington...I wonder what happened to cause such dramatic increase...
What happened? Overshoot happened ... always has, always will.
Yes interesting. Hasn’t been a huge building boom there as far as I am aware of.
but the rents have gone insanely high there, especially relative to ‘quality’, maybe more young people returning to live with parents?
Depopulation?
Maybe Auckland/Wellington got expensive enough that people (esp. young people, with options) just say "screw that" and live somewhere else instead. There would be a lag before that's reflected in the numbers. Anecdotally, I know people who have moved from Auckland to the SI cities because the affordability is so much better.
As others have said above, there's probably a lot of previously empty places being offered. Some 'ghost houses' that need to bring in income now capital gains are gone, some that failed to sell for an acceptable price at auction so are being rented, and some that have been 'renovated' and are now lettable. The amount of (mostly unnecessary) 'renovation' going on in Auckland has been staggering. I'm not sure people understand how much building capacity has been soaked up by completely unnecessary work. The undersupply of builders and materials could become an oversupply very quickly, much like the houses themselves, if property owners don't feel rich enough to splash out half a mil on some decks and a new kitchen.
No building boom in Wellington ..?
“ as far as you are aware…’”
sums it up really
I live in Wairarapa, but travel into Wellington if I need to hit the office. Certainly have noticed an abundance of "infill developments" over the past 2 - 3 years. Plenty of sub-divisional work around Tawa and Churton Park
COH, what happened? Anecdotally from our Welly based adult son. Long established flats are breaking up. Young people 3 or 4 years out of uni are heading to Europe for summer (our winter). Their OE has been on ice for more than two years, while careers have been cemented. They are confident to travel and return when they want to, so they are.
No no. No, this can't be correct. I was informed by the "investors" over at Stuff that they'd simple increase the rents to cover all the costs (inflation, rates, healthy homes etc). It'll be the renters, not them, that will suffer!
House prices are simply due to supply and demand... However, their rentals are diffrunt! /s
lol yes we will see some fallout from this, and that has to be good.
Rents will likely stay static (we are planning that) but may also go down in reality (and yep we have worked that through too). This is the economic model.
The issue of increased landlord costs is not irrelevant but must be absorbed or they must sell.
Wellington a 45% increase in rentals on TMe. I know it gets a little cold down there this time of year but 45%?
Perhaps they know something I don't?
The interesting part is that the two regions, that have been seeing the biggest price drops over the last 6 months, are now seeing a huge surge in rental listings.
I suspect, as with other housing bubbles, the proclaimed “shortage” of housing evaporates quite quickly as prices start falling
I'd be interested to see a trend stretched out over a number of years, could just be coming of historic lows. Since the Hutt Valley would also be covered by the Wellington stats I wouldn't be surprised if a large number of new houses built up that way have come up for rent.
Such a toxic backdrop for residential property investing - no income increase, higher funding costs, and reducing tax deductibility of interest.
Prices on existing residential stock need to halve to make them competitive on an after tax return basis, in the context of current interest rates.
I suspect people packing up and moving to greener pastures (Australia) has something to do with this - will be interesting to compare stats to see if there's any correlation if and when net migration data becomes available. Possibly more internal migration away from cities towards regional centres as well (with more organisations offering flexible work from home arrangements (aka. work from anywhere)(
I would point directly at China, who appear to be closing up shop for people to emigrate and tourism from there. Been calling that for a long time, too.
We need to turn more to Japan, South Korea et al
Seasonal aspects have to be included here. The middle of winter is the hardest time to find a tenant. Everyone stays put.
It’s a bit like we how there is often a story of huge lines to see a rental property towards the end of Feb when large numbers of students are racing around trying to find a flat for the year.
great story, but any real substance? We will have to wait a few months and see.
Good. Can we stop concreting over our best growing land now?
Been calling a housing oversupply for a while, there is still of developments at their beginning stages, who is going to live in all of these, though I hope for the main part it will people who own them.
On Newstalk ZB some property investors association guy said the biggest change is young NZers breaking there fixed term rentals due to going overseas adding to supply, no students coming in and increased supply from new builds and people who cannot sell, says there us now "obviously" an over supply of rental accomodation.... i am not sure the tide has gone out.... might be a TSUNAMI coming.
Agree. In line with my comment above. Established flats are now on periodic tenancy agreements, so it's easy to exit. Good for them, I say.
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Fly, fly, fly my little birds. Go see the world. It helps.
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