There has been a significant decline in rents for central Auckland apartments over the last four months.
The latest bond data from Tenancy Services shows the median rent for all newly tenanted apartments in central Auckland has dropped from $520 a week in May to $460 a week in September.
That's a drop of $60 a week (-11.5%) over four months. It also means the median rent for apartments in central Auckland is now $40 a week cheaper than it was in September last year.
The decline appears to have affected all types of apartments, with rents for one, two and three bedroom units all declining over the last few months.
However although rents appear to be on the slide, the number of apartments being rented out has steadily increased over the last three months, rising from 553 in July to 910 in September. This was more than double the 437 apartments that were newly tenanted in September last year.
The central Auckland district includes all of the properties that lie within the boundaries of the former Auckland City Council before it was merged into the current super city. So the figures capture a wide range of apartment types.
But the figures are dominated by CBD apartments, which tend to be smaller and are more likely to be owned by investors than apartments in the suburbs.
These types of properties tend to be popular with students and for use as short stay visitor accommodation such as Airbnb. Both of these sectors have been hit hard by the COVID pandemic restrictions which is likely to be the main reason for the decline in rents. That decline could intensify over the next few months as many overseas students finish their studies and head home.
With no indication yet on when overseas tourists and students will be allowed to enter New Zealand in significant numbers again, the short term outlook for apartment rents in Auckland's CBD looks grim. That is why the Auckland CBD apartment market remains one of the few soft spots in an otherwise booming housing market.
Investors in particular are being very cautious on price, because it is so difficult to gauge a CBD apartment's potential rental income stream at the moment. However rent rises have been relatively modest in most parts of the country over the last 12 months.
Over the whole of the Auckland region, the average rent for all types of residential properties newly tenanted in the third quarter of this year was $539 a week, up by $10 a week (+2%) compared to the third quarter of last year. Nationally, the average rent for all types of properties was $453 in the third quarter of this year, up by just $5 a week (+1%) compared to the same period of last year.
Not surprisingly, rents have been weakest in Queenstown-Lakes, where the average rent in the third quarter of this year was $500 a week, which was $125 a week lower (-20%) than the average rent in the third quarter of last year.
The second table below compares average rents in most districts throughout the country in the third quarter of this year with the third quarter of last year.
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