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The rate at which rents are rising in Auckland has been slowing for the last three years, Barfoot & Thompson says

The rate at which rents are rising in Auckland has been slowing for the last three years, Barfoot & Thompson says

The rate at which rents are increasing in Auckland is continuing to slow, according to the region's largest rental property management agency.

Barfoot & Thompson manages nearly 16,500 residential rental properties on behalf of landlords, and says the rate at which rents for those properties have been rising has been slowing since at least early 2016.

Across Barfoot's entire 16,500 property portfolio, the average rent at the end of June was up by $16.66 a week, or 2.98% compared to the same time last year.

That increase was lower in both dollar and percentage terms than it was a year ago, when the average rent was up by $23 a week or 4.5%.

Within the Auckland region the average rent increase was mostly between 1.97% in Rodney to 3.96% in South Auckland, with Central Auckland being the exception with an annual increase of 8.73% (see table below).

Much of the increase in central Auckland appeared to have been due to a big increase in the average rent for CBD apartments, which was up by $42 a week (8.7%) compared to a year previously.

Barfoot & Thompson director Kiri Barfoot said that was primarily due to growth in the number of larger, high end apartments in the CBD, which commanded higher rents.

Two bedroom homes in all areas also posted higher than average rent increases, rising by 4.2% compared to a year ago, while the average rent for larger homes was up just 1.2% for the year.

"The proportion of year-on-year weekly rent increases across the region has lessened each quarter since at least early 2016, and it's a marked trend that has continued this quarter, despite coinciding with a period of considerable change for the rental sector, " Kiri Barfoot said.

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Average rents in properties managed by Barfoot & Thompson - June 2019
  Number of Bedrooms Average rent all sizes Average weekly increase last 12 months Average % increase last 12 months
  1 2 3 4 5+
Central Auckland $414.94 $613.08 $1,087.91     $524.17 $42.08 8.73%
Central Suburbs $388.41 $513.90 $649.30 $819.24 $1,069.42 $618.15 $15.62 2.59%
Eastern Suburbs $392.65 $524.99 $683.47 $893.84 $1,084.33 $654.91 $12.90 2.01%
Franklin/Manukau Rural $319.65 $381.31 $458.20 $565.14 $673.77 $482.16 $16.96 3.65%
North Shore $400.16 $494.56 $611.31 $750.54 $921.93 $629.34 $18.99 3.11%
Pakuranga/Howick $357.89 $465.73 $571.93 $688.73 $800.68 $603.03 $18.64 3.19%
Rodney $355.03 $454.67 $548.17 $671.27 $822.81 $567.68 $10.95 1.97%
South Auckland $320.08 $419.22 $510.87 $617.57 $739.30 $511.85 $19.48 3.96%
West Auckland $338.24 $437.49 $523.53 $635.89 $769.92 $528.82 $17.05 3.33%
All Auckland $379.78 $484.03 $573.21 $703.57 $870.33 $575.56 $16.66 2.98%
  2.92% 4.22% 3.25% 1.15% 1.13% 2.98%    

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75 Comments

Hmm... No mention of falling rents in top end suburbs.

Its only a matter of time before rising unemployment denys Landlords the pricing power. Thats across the entire spectrum too. Migrants travel to where the work is and just as quickly abandon areas where it isn't.

not to mention the extra homes being added to the available stock... ..

Retired Poppy. You are ever hopeful of a change in LL fortunes, does that possibility keep you awake at night wondering what the new day will bring?

14
up

so what happened to all the threatening of rent increases after the healthy homes bill being passed or the FBB being implemented or the Ring fencing bill being passed???

absolutely zilt

WAR ON LANDLORDS!!!11!!!11

14
up

Turned out to be nothing but hot air it would seem. Almost as if rents are determined by what the market will bear based on local incomes rather than landlords costs.

https://www.newshub.co.nz/home/new-zealand/2019/07/tenants-struggle-as-d...

We’ve not yet seen the full effects of insulation requirements, which are regs I fully support. Heating and ventilation due date yet to come. Not to mention tax ring fencing - the primary effects of this are still a year away. Then to top it all off we’ll get changes to the Residential Tenancies Act. Rental supply curve is going to be shifting to the left and it’s not going to be fun for landlords or tenants.

That just proves the rental market is just that- a market! Dgm, dont you know how markets operate? Here are some non-akld stats: "Stock is not keeping up with demand as Waikato and Hamilton rents increase | Stuff.co.nz"
https://www.stuff.co.nz/waikato-times/business/114576879/stock-is-not-ke...

If we keep building at the current rate, when it's arguably not needed (is there really a shortage?), rents will start going down, like in Sydney. Not such a bad thing for renters.

Rents are a lot more in Sydney.
Rents are no way going to drop in the future, so you would be far better off buying!

TM2, you say "Rents are no way going to drop in the future". Are you also saying unemployment is never going to rise? - lol!

Only a vested Spruiker would make up stuff to prevent their livelihood from slip sliding away.

Rents in Sydney were a lot more in 2017 than they are now. I'm sure, somewhere, theres an Australian TM2 that thought the same thing. "Rents in [Australian equivalent of CHCH] will never go down, cobber - better get on the ladder now or miss out forever."

Rents are a lot less in Perth .. what is your point?

Sydney and Melbourne rents are hideously high compared to Auckland.
Auckland rents aren’t really high when you consider the value of the property that tenants are paying for.
There is no way that landlords in Auckland are going to be dropping rents and achieving a lower yield, they would sell them effleurage that happens

The value of Auckland properties is a lit lower than their prices have been recently. The prices are slowing converging on their actual value in Auckland.

...and if they sell them, that's new homeowners removed from the renting population.
I don't know why *property expert* landlords think houses disappear when they sell them.

Number of occupants is higher for rentals than it is for owner occupied. Look into it. On average, transfers from landlord to owner occupier results in net increase in number of renters to rentals.

Happy to see the source of your claim. I don't disagree with you, but I've been unable to find anything to support the rhetoric. My theory is, while occupants are often higher for rentals it's historically been due to why people normally rent. E.g. Students, low income households, certain groups with a tendency to have large family units.

However over the past 10 years the numbers of households renting are up 25% s vs 4.2% for Owner Occupied. Surely this imbalance has eaten in to the "life stage" where young professional couples (middle class?) start looking for a place to plant roots and have a family. If rental properties start hitting the market, they're not going to be bought by students or low income households. The first cab off the rank is going to be the couples or young parents looking for a home and these are often zero sum buyers. There may be a bit of shuffling around if these zero sum buyers purchase a rented property, but they also leave a rented property vacant.

Just census data. Andrew King has done a few articles on it. Living with flatmates to save for a deposit is very common. If you have a theory that first home buyers live in lower occupancy houses than the norm when renting prior, then the onus is on you to provide evidence of this. Déjà vu with this.

“It has been argued that if there are fewer investors then this would be good, as the properties are still there, they will just be owned by new first home buyers. Unfortunately it isn't that simple. The average number of people per owner occupied property is 2.1 while for rental properties it is 3.9. This means that on average, whenever a rental property is sold to an owner occupier, there is an average 1.8 people left behind who still need a rental property to live in.”

https://www.nzpif.org.nz/news/view/58933

What a complete load of shit. Remove the demographic skew (older people are more likely to own) and the socio economic skew (wealthier people are more likely to own) and the differences in occupancy rates are going to converge.

This is such a horrendously oversimplified use of statistics as to be completely meaningless and useful only convincing simpletons who aren’t smart enough to understand the data.

Cheer up sunshine, you’re obviously quite upset.

If you have evidence to support what appears to be nothing more than speculation, let’s have it. Otherwise this is just your opinion and like your previous comments I’m going to afford it all the credibility & consideration it is due - none.

I provided plenty of evidence last time to dispute your claims and you simply ignored all of the factual data and sidestepped the fact that you had misrepresented data.

Here is evidence older people are more likely to own:
http://archive.stats.govt.nz/Census/2013-census/profile-and-summary-repo...

Here is the data showing young people are over represented in overcrowded housing:
http://archive.stats.govt.nz/browse_for_stats/people_and_communities/hou...

Higher occupancy is more closely tied to socio-economic and age than owner occupier vs renter.

By given you have proven you are unable to even read the x axis on a graph, I really don't think you will be capable of analysing the datasets and actually arriving at a logical conclusion.

Rubbish. This information don’t even come close to proving the point you’re trying to make. Talk about grasping at straws. Do better.

I don't disagree with you, thanks for sharing that link from a reputable source. I just don't think it's that simple. We've had over the past decade a) a massive increase in the number of rented dwellings and b) a housing affordability issue with First Home Buyers. Painting over displaced potential First Home Buyers with the "3.9 people per rented property" is a wild assumption. In my opinion, what's happened (to put it simply) is Investors have outbid First Home Buyers and are now renting back those properties to FHBers. The household composition hasn't changed, just the ownership.

My theory is only supported anecdotally, being a millenial I cannot think of one similarly aged relative/friend/acquaintance who has purchased a home in the last 5 years and brought in flatmates. As far as renting, the only people I know of who have flatmates are single, whereas the couples are in a sole tenancy situation. But I don't live in Auckland, and I do concede we have had 100k p.a. of inwards migration over the past decade and these people all need a roof over their head.

It's horribly misleading to look at the averages across the two groups. You instead need to look at the demographics of people being removed from the rental pool, and moving into the owner occupier category.

The majority of first home buyers are not in their early 20's sharing a flat with 4 people. People living in overcrowded/high occupancy conditions are usually doing this as their socioeconomic conditions require it - these are not the people who can afford to own.

FHB are typically an early 30's couple, with most having children. They will are more likely already a single family household so the change in occupancy rate will not change when they move to being an owner occupier.

That is how they are able to afford paying the rent charged. Renters adapt their living arrangements based on the price of the rent. At some point there is overcrowding in a dwelling. One can argue that there is a shortage of affordable rental accommodation also.

https://www.stuff.co.nz/business/property/109960285/aucklanders-share-be...

"Aucklanders are resorting to sharing a bed with a stranger or paying upwards of $100 per week to live in someone's lounge as the cost of renting in the super city continues to rise.

One young woman said she paid $195 per week to share a bed with another woman for about six months. "

.

"Auckland rents aren’t really high when you consider the value of the property that tenants are paying for."
Wow.. TM2 needs to get out of Christchurch (and NZ) more...
'There was once a frog, who lived in a well.."

"There is no way that landlords in Auckland are going to be dropping rents"

Well actually if the alternative is an empty house, yes they will.

I hold sole tenancy on a large house in Auckland, which I manage for the owner. I had a vacancy come up, and advertised at the existing rent. No one bit, so I had to lower the rent slightly until someone did.

That's how markets work, not this fantasy world where people can sell goods and services which are available elsewhere at whatever rate they want.

There’s not just one rental market in Auckland; there are a multitude of markets......

Well-presented houses in handy localities (like Ponsonby) will fare differently from run-down properties in South Auckland.

Generally, the rental market is seasonal too. Landlords are more likely to attract a premium rent in Jan/Feb/March than in June/July/Aug.

An increasingly important determinant of rental value is convenience and proximity to the CBD: people will happily pay a premium to avoid Auckland’s daily transport/traffic grind.......

Walk to work in the CBD is the ultimate lifestyle for many people.

TTP

Toothy , my favourite . I took these from Interests charts. Median rent Auckland central 530 pw. Median rent Papakura 520 pw North Shore 595 pw. As you state lots of "run down properties in South Auckland" .( I can not comment on that as that is your opinion ) Looking at the same charts you would hard pressed to see any seasonality.
In regards to my original comment, we appear to be in agreement that Auckland rents are higher than those in Sydney , across a multitude of markets.

It rains a lot in Auckland. Walking in the rain sucks.

TM2, I didn't say rents were more in Auckland than in Sydney, I said they have been dropping in Sydney. There is an oversupply of apartments.

Voiceofreason, but rents are higher in Auckland, even adjusted .

Given this article is about Auckland rents, and you are resident CHCH 'Expert', on what basis is your comment made?

Crucial question is building what for whom?

Aucklanders can only pay so much, not sure if it's peeked yet ..

The overcrowding of residential rental properties allows for higher rents. With the majority of immigrants settling in Auckland - such a scheme is possible.

With large capital gains on the decline, owners might be forced to rent their properties out. Horrendous mortgages make for horrendous rents.

Though renters ultimately set the price of rents by entering into tenancy agreements, supply n demand seems to be favouring landlords.

The government also spends billions subsidizing landlords via benefits (chiefly through the accommodation supplement) - which is really a transfer of wealth from the productive economy to the rentier class.

Such subsidies allows for higher rents. There are also many households who could easily pay more rent. Other households could pay more rent if they cut back on petrol, entertainment, eating out, clothing, etc

But be warned ..

Correct me if I'm wrong, ancient Rome had a population of half a million, due to increased taxation (cost of living) it declined to perhaps 100,000 between 400 and 500.

I recall Rome peaked at more like a million. During the Middle Ages the population was as low as 30,000.

Yes, I think you're right about the Middle Ages.

Few people from my old work place have rentals around Auckland. One of the issues they have in common is the number of tenants living in their property, often the head tenant will have extra one or two people to lessen the higher rents; boyfriend, girlfriend, shared room.
You can't really catch them out as the extra person simply moved out for the day at inspection time and nothing much landlord can do about it.. It's a real no no to snoop on them!

Well yes, once a tenant signs a tenancy agreement they have possession of the property (from the specified date). So of course snooping is a no no - it is trespassing and harassment in one.

Really such behaviour should be met with the arrest of the landlord/property manager.

Zack, if tenants sneak in extra tenants then they are in breach of their tenancy agreement and risk being moved on.
It isn’t really that hard to find out if there are extras when you do the quarterly checks.
The best thing is not to have the property overloaded In The first place and if they want an extra come in, they need to have that person cleared as well.
Professional landlords are more onto what is happening in their properties than the casual landlord who is parttime

How do you know that they have extra people? having extra bed in the room doesn't mean anything! They can easily say that my friend staying for few days. When I had our Auckland home rented out while we were in Australia, I asked that question to our property managers, the answer I had was "Officially, there isn't much you can do about it. You can find other reasons to terminate the tenancy but it might take 3-4 months". Basically, you can't kick them out willy nilly and you would have to provide proof at tribunal.

Chairman, it isn’t difficult. There are often telltale signs and you build rapport with your tenants and providing you put in decent tenants then generally you wont have it happening very often at all.
We do n t mind the odd partner staying over every now and then but if we know they are there for good we have a discussion.
We specify how many tenants are to be there and itemise who they are. If they move in an extra then a new lease needs completing.
Officially it is very easy to move the extra out and saying there’s isnt much you can do about it is rubbish.
They have breached a tenancy contract and can easily be moved on if that is what you want!
The property manager isn’t much if that is what they said!!!

Too bad THE MAN 2, no investment is risk free.

Off course but professional landlording Beats the other options hands down

you forgot the air quotes on "professional"

you forgot the air quotes on "professional"

Yes, it seems quite common.
And of interest is whether census night captures that? If extra people are living in the property in conflict with the tenancy agreement, the 'official occupancy' of the dwelling may not reflect the real occupancy

I don't think you can grab that number of head count from Stat night on a specific property.. I might be wrong!

Presumably, unless a landlord is a muppet, they must wonder how 1 tenant can pay $900+ and why they would do so for a 5 bedder.

Chairman, if you monitor water use you will know if there are extra people. If there is then just increase the rent, win-win

None of you guys are actually answering the question with some practicalities. Say if you rent the house out for 4 people and they put in 5 or 6. If you confronted them, their obvious answer would be “No, those two extras aren’t permanent”. Providing them with concrete evidences and they sure can sue your pants off at Tribunal.
Water bill might give you some hints but won’t stand up in Tenancy Tribunal. 4 people having 15 mins shower each will be the same water usage as 6 having 10 mins shower each!

As I say there are various ways of finding out whether there are extras, including the no. Of cars around and we always know what car belongs to what tenants.
When we do the checks there are often signs including 2 lots of clothes in wardrobes when there is only meant to be one etc.
We explain to tenants prior to moving in what we expect, and runs professional business.

No offense but you sound like a bit of a creep. Do you don a balaclava and check on your tenanted properties every night too?

None of that would stick in a tenancy tribunal.

I'm a young person, (27) have been lurking on this site for the last couple of months as I'm a potential first home buyer. Currently we have two extras in our flatting arrangement in Birkenhead. We rent a nice villa like house at a $1000 a week but have 6 people living in it when we are only meant to have 4. I think you'll find it hard to spot the extra cars when the whole entire street is packed to the brim due to the extra people living in houses. Also good luck taking people to the tenancy tribunal and winning with extra clothes etc. Its a trade off on how people are saving for their first homes this arrangement allows us to save $1500 a week towards a deposit to be able to buy in the 800-950k range with a 20% deposit in the beachhaven area.

Cheers, it's much more common than people thinks..
TM2's tenants are probably doing it without him realising it!

"We explain to tenants prior to moving in what we expect, and runs professional business"... like they would take landlord's strict instructions seriously!
All rules are governed by Tenancy Acts.. you can say whatever you like, if they are outside the Acts you can forget it! I was a Landlord once and also a tenant for 3 years, you can't set your own rules as Landlord.

Actually you are right, probably no way to prove. But you can give 42 day notice to vacate without giving reasons other than you need the house for family members.

Enjoy the blowback on that one if your tenants decide to take you to tenancy tribunal when you immediately relet it.

The tactic is used surprisingly often. I have never done that, no need as a 90 day is good enough for us.

Yep, and I have known a particular landlord who did this trick and was asked to compensate their previous tenant almost $3000. With google search on cached results, it doesn't take much to check past web pages.

There seems to be two different arguments going on it these threads. One is overcrowding, ie more people than what the property is designed for or legally allowed, and 2) More people in the tenancy than what was first stated, regardless of design or legality.

If a property has 3 double bedrooms, then that is 6 maximum adults. It only should become an issue if the number living there is greater than this.

Further evidence that the middle and lower classes are skint.

wage growth has stagnated, taxes are increasing so even the flood of immigrants cant push the rents up.

Quite amazing given all the extra hurdles for landlords to overcome like insulation.heating and ring fencing.

At least the OCR cuts should give landlords some relief.

All is not well in the city of sails

City of sales!

City of Non Sales

Stalemate eh mate

I moved into residential and commercial REITs instead. Work required: opening the dividend (= rent) check that arrives in the mail. Highly liquid as well.

I let 'professionals' like the Man 2 do the hard yards for me.

Hard yards with great returns and lifestyle, unbeatable

.

Unbeatable for you, for your particular skillset, circumstance, and disposition. For many others, it's very beatable.
Don't get me wrong, it sounds like you're doing great. But it'd be a mistake to project your situation onto everyone else.

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See Party Policies here. Party Lists here.