An unusually low number of new residential tenancies commenced in June, and median rents declined for the second straight month in what may be further signs housing supply is catching up with demand.
According to data from Tenancy Services, the national median rent was $535 in June. That's down for the second month in a row from its peak of $550 set last summer.
Rents usually peak over the summer months when demand for rental properties is greatest and then ease back slightly over the winter months, so the drop in median rents over May and June was not surprising.
The national median rent in June was still $35 a week higher than it was in June last year.
However what was unusual was the very low number of new tenancies taken out in June, with bonds received for just 10,893 residential tenancies during the month.
That was the lowest number of bonds received in any month of the year and the first time it has been below 11,000 since current records began in 2012, apart from the lockdown affected months in 2020 and 2021.
The graphs below shows the trends in median rent and number of bonds received each month.
The fact that rents continued their normal winter decline while the number of properties tenanted dropped to a new low suggests the rental market may be easing, with supply starting to catch up with demand.
If the drop in the number of tenancies was caused by a shortage of available rental properties you would expect rents to be rising.
However it's probably still too early to be calling a trend. At least another couple of month's data will be needed before we can be sure which way the rental market is headed.
The comment stream on this story is now closed.
- You can have articles like this delivered directly to your inbox via our free Property Newsletter. We send it out 3-5 times a week with all of our property-related news, including auction results, interest rate movements and market commentary and analysis. To start receiving them, register here (it's free) and when approved you can select any of our free email newsletters.
58 Comments
My guess is that rents have got too high for incomes - exacerbated by the sudden increase in the cost of living. Hence, people who would otherwise have moved are just staying put - with parents, in crowded shared houses etc. The reduced demand might lead to slightly more affordable rent levels (but I doubt it).
Watch rheumatic fever rates soar in the next 12 months as an indicator of overcrowding
my next door neighbour's adult daughter just moved back in to save money.
Could be widespread?
Few houses round here have recently had more caravans and motorhomes appear in the driveways for very long stints.
For Auckland there are about 5300 listings in Trademe with more then 3600 available now.
That is a lot of empty rentals.
But the housing shortage!!!
3600 is just over two weeks stock on hand... it's like you think there should just be a dozen homes available as of now. For reference there are over 12000 auckland houses to buy
All those landlords sweating that the maths they did based on a 4-5% yield on the newly completed million dollar town house simply ain't there
And the million dollar townhouse which might now be worth 850k
Many kiwis came home during the pandemic, plus those that would normally be leaving stayed put. pushing up demand / rents.
Both groups are now heading overseas at the same time reducing demand.
Until immigration picks up rents will likely stay subdued.
For that to happen we need highly skilled immigrants who will earn enough to pay the higher rents. Fruit pickers and cafe workers are great but i am not convinced that is who is being attracted
I have an expat friend thinking about returning home so I took a look at his preferred location (provincial NZ). Not a lot to choose from (and with hindsight it's a shame he sold his one bedder in 2015). In fact, for a single guy wanting to live alone there's exactly zip without reverting to a 3 brd.
Given he wants to give up IT and do something low skilled I have a feeling he may not come back, which would be a real shame.
People are getting picky about who they rent to, so they would rather drop the rent to attract a quality tenant or leave a property empty for longer, than rent to someone who is seen as an undesirable tenant.
Seems odd that rents would be dropping as the 'rent hiking tenant tax' starts to come into effect.
Yeah I thought that was going to be passed on, so shouldn't we see +33%?
Ah yes, the fallacy that property is the one asset where the income changing (tax break lost) affects the income (rent)
bird in the hand worth two in the bush -!
lots of fixed term tenancies were ended as a new tenant might pay 10-20% more over the last five years -- now landlords going if i have to re rent this -- not only will i lose the empty weeks -- -but the new rent may be the same or even less -- so better stick with what i have and simply roll over the fixed term tenancy!
I don't know what you're referring to but a lot of private landlords are under-rented meaning that rents are well below market price. The property mgmt firm told us our rents are 120 to 150pw underpriced on a median priced Auckland property. Yes we are considering resetting the rent. Cue the interest.co outrage
Indeed. Both our kids in AKL, staying on in rental that is $100 & $120 pw below what it was 1 year ago, month to month landlord say stay as long as you like. Both flying the coup in November for overseas, 3month and 6month. Delayed from 2020 of course. But anecdotally there yo go that’s 22 & 24 yr olds paying lower rent than 12th s ago but outta here soon.
Whoops wrong paste.
Were they cheeep :) sorry I couldn't help it
However what was unusual was the very low number of new tenancies taken out in June, with bonds received for just 10,893 residential tenancies during the month.
Wouldn't a lower turnover in tenancies be expected with the new tenancy laws on no-cause terminations brought in last year?
The law changes actually have a massive effect. Likewise landlords are having to be more choosy about who they sign up. Both factors are probably slowing the market
Nearly every rental on my watch list, or that we applied for, has dropped rents since initial listing. I'm seeing much bigger drops at the top end (up to 20% off) vs the low end (2% off).
Lots of landlords holding out for their most desirable tenants -> no kids, no pets, dual income -> not realizing those are highly mobile and only a small portion of the market.
Also, there's a lot of rubbish houses listed atm -> 60's/70's do-ups that have had a lick of paint in the kitchen if you're lucky.
Having said that, I wasn't willing to risk losing the house we just moved into by waiting to see if the rent would drop - it is a fantastic property with reasonable, personable landlords in a sought-after area. So if you're property is desirable, it will be rented.
Edit: I should add, looking for a large family home, it seemed most of the other prospective tenants we saw were flatmates looking for a nicer house, rather than families.
- it is a fantastic property with reasonable, personable landlords in a sought-after area. So if you're property is desirable, it will be rented
Landlords are evil though, they are being regulated out. You will be in an apartment block of 100 units owned by Blackstone sooner or later Chaos, it's what you want you know.
Funnily enough, we used to live in a large apartment block (a few rentals ago)! The yield was too low with 95% occupancy, so the developer cashed out to Kāinga Ora, who promptly gave everyone 6 week vacant possession. Only have to report the families they take off the waiting list, and not those they displace to do so :P Thought about adding ourselves to the waiting list so we could say "how convenient, we're already here".
KO is landlord of last resort ... which means that they do not evict the insufferable KO tenants who threaten and harass their neighbours. The cheap cheap rent helps to placate those affected
Te Kooti - I doubt Blackstone would be a worse landlord then Housing NZor KO.
More professional, but they'll never rent undermarket.
So residential landlords now have:
- income increases tailing off (slow rent growth vs inflation)
- capital losses
- expenses rising at pace via higher interest rates
- tax inefficiency via lack of deductibility
What a time to be invested!!
But they are in it for the long haul (in other words they didn't expect to ever see this happen, they hope National win the next election, and they are too greedy to take their massive gain now as it is a bit less than 6 months ago).
✈️✅
Skilled professionals and young people realising that they owe nothing to exploitive landlords and an abusive, mentally unwell government.
You need to be mentally unwell to want to become a politician.
bang on kwbrn. We have made a right mess and scared off all the best leaders. Now what
Indeed Brock. As my post above, our 2 (22&24) paying lower rents, landlord says stay as long as you like. But come Nov & Jan they both outta there for 3 & 6 mth min…
Many landlord investors who have brought houses over the last decade or so have only experienced rising house prices and rents. Many are negatively geared and have been relying on capital gains. Interesting times ahead as both capital gains and rental returns evaporate for landlords.
I wonder if part of the drop-off in new tenancies is indicative of a wider "wait and see" approach being taken by renters trying to build up savings and guess the bottom of the market before buying if they're able. My observations suggest rents on individual properties tend to be hiked higher between tenancies than when the property is already tenanted, and the best way to (try and) control rises is for tenants to stay put.
For what it's worth, rates on our Wellington rental went up 6.5%, and insurance is up by a significant amount, but we're considering not increasing the rent at all. The current tenants of the past 2 years are prime FHB demographic, and have asked to be allowed a dog, to which we agreed. Normally the property turns over every 12 months as it is very attractive to prospective FHBers working in the CBD, but it feels like the mood has changed and the current tenants are settling in for the long haul.
This popped up on my facebook feed from Nicola Grigg Mp National
"
With house prices in Selwyn rising more than 30 per cent over the last year, and the average rent increasing by $90 per week, I invited National’s Housing and Infrastructure spokesperson, Chris Bishop, to our region to share our view on the future of the house and land market in New Zealand."
To which someone points out this is bullshit and this is her response.
"Rodger Graham Myers I’m not lying and this isn’t ‘crap’. Data from MBIE’s Tenancy Services Rental Bond Data shows that in October 2017, the median rent for Selwyn was $450. In June 2022, the average rent in Selwyn is $545, an increase of over $90. Check for yourself"
Typical National...slight of hand...don't care about the numbers or accuracy....we are right, vote blue.
She wouldn't have the math or comprehension skills of a twelve yr old from a good school.
It's funny, she claims that from 2017 to 2022 the median rent in Selwyn increased from $450 to $545 per week...."an increase of over $90 per week!!!".
Yet, from Aug 2009 to Aug 2014 (National's first 5 years) Selwyn's median rent increased from $340 to $478, which is an increase of over $120 per week.
Your dates somehow manage to select the time before and after Chch earthquake. By Sept 17 median rent went backwards, was just 400pw
No it wasn't. 400pw was the lower quartile rent. The median rent of September 2017 was $453.
So that was $25pw lower than the figure you originally quoted... nice one. Brings the increase to 95 ie "an increase of over 90 pw"
The average from January 2014 to December 2016 was $473.58 per week. It was 2017 when the average rents started winding back slightly to $453 per week but then straight back up to $475 in November.
That's no consolation to renters from 2009 to 2014 though. Maybe in 2025 (or sooner) we'll see rents retreat like they did in 2017 and Grigg's commentary will be all hot air.
New builds will be under a lot of pressure over coming months prices dropping and costs growing, would be good idea for government to take over these struggling developments and build to rent at cheap rates so many people especially in Auckland are getting ripped off and paying ridiculous rents.
The govt can't manage what it already has to...heaven forbid Welly Public servants they become developers!
No more bloody bailouts!
There's been bailouts for years, and that's what got us into this mess.
Stop the bailouts and let's have some good old fashioned price discovery!!! Even before covid, we had the 50 bp "shock and orr" bailouts, and when covid hit we had the mortgage holiday bailouts, the developers bailouts, the switch to IO bailouts, the lvr removal bailouts, then the "emergency" low rate bailout...
It has got to the point where everyone thinks they can make money from property, and property development, all the time, every time. No risk in property mate. Leverage up mate.
No more bailouts. Bring back free markets without all the interventions. The sooner we get back to reality the better. The last bloody thing we need is for the government to throw more money at propping up land prices. Let the developers go bust, let land prices come back to earth.
I agree, but its hopeless. They will throw all the cash and immigration too, to keep NZ as expensive as possible for as long as possible. This black hole will swallow everything until nz is a husk, fit only for the rich in guarded compounds.
Let's be honest, the real reason rents are dropping is because anyone with half a brain is booking a ticket to Australia where the wages are higher, rents are cheaper, weather is warmer and where they won't have te reo shoved down their throat.
Haere rā then mate, don't let the door hit you on the way out.
Much has changed over the last 1000 years. I saw an excellent tv documentary on The Domesday Book by which the Norman conquerors surveyed the whole of England in 1086 only 20 years after they conquered England in 1066. In just 20 years the Norman nobility had displaced all the Anglo-Saxon nobility and land owners under a veneer of impartiality.
The survey listed and classified every single person in the land including the vast majority who fell into 3 broad categories (including the dispossessed Anglo-Saxon nobility): the "freemen" who independently owned some land, the villains who worked as paid employees on the land, and the slaves who were permanently tied to their employers as unpaid labourers and weren't allowed to ever leave their place of work. Yes, it seems that slavery was a normal feature in pre-democratic England, and probably in the rest of the world at that time. So it would seem likely that a large proportion of today's European New Zealanders would be descended from slaves. This begs the question: are there any slaves in NZ today? And are landlords today's nobility?
I'm a "villain". I quite like that.
"villein"
Could the drop be attributed to bonds not being taken (available to tenants with a perfect record only)?
Would a landlord ever do this?
We cannot rely on a lot of things these days. The govt being at the top of the list.
It's still pretty messy out there. Lots of grumpy people. Lots of small businesses still doing it tough. No job applicants as they've literally left the 'building'. And the 'building' is shaky.
The current landlords of NZ Inc are running the ship against the rocks - which is what I think they were trying to do all along. The mindset of your average socialist is not a happy place.
If the government isn't super incompetent, then it's a master genius plotting and playing out a grand plan.
I tend to think of it more as an increasingly limited means to try and appease too wide an array of interests.
No Jacinda isn't that smart. She is actually very very dangerous to NZ's best interests. This is not a normal labour government. It is far far left and it's ideology is a cancer on this country. And I used to be a lifelong labour voter. Never ever again will I vote for her or her looney labour party. I didn't leave labour. labour left me.
having been a landlord in the past, I'm often surprised by other landlords getting excited by pushing up rents by $20 and trying to hike them as often as possible. They say things like "if interest rate go up, rents go up" or "if tenants leave, we'll replace them with higher paying ones" In response I always say, in only takes a week or 2 of being unoccupied, to remove that $20 pw. You are far better getting a good tenant at lower rent, than trying to price gouge more transient tenants. I'm no lefty, but longer leases also result in more stable households and better family outcomes. don't we all want that? or do we aspire to this unequal society we have nowadays?
Some lessons are only learned the hard way.
Yes, lessons may be learned the hard way if that typical 2 week unoccupied period turns into 2 months.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.