The rise in residential rents that occurred in many parts of New Zealand last year may be petering out.
According to the latest bond data from the Ministry of Business Innovation and Employment's Tenancy Services division, the national median rent for all property types was $560 in February.
That's down from $575 a week in January and up by $10 a week compared to February last year, giving an annual increase of 1.8%.
Most bonds received by Tenancy Services are for newly tenanted rentals, and new tenancies tend to set the benchmark for market rents, so are a leading indicator of where rents are headed.
The table below shows the median rents in all regions for properties tenanted in February and their annual rates of change.
Significantly, there were four regions, Northland, Auckland, Wellington and Tasman, where rents were unchanged from a year ago, while at the other end of the scale Gisborne and Taranaki had double digit annual increases.
However a closer look at the numbers suggests most of the increases in rents occurred in the first half of last year and rents in most places tended to stabilise in the second half of last year. In some places they've started to decline at the beginning of this year.
Median rents declined in February compared to January in nine regions - Northland, Waikato, Bay of Plenty, Hawke's Bay, Taranaki, Tasman, Nelson, Marlborough and Otago, were unchanged compared to January in Auckland, Wellington, West Coast and Canterbury, while just three regions - Gisborne, Manawatu/Whanganui and Southland, had higher median rents in February than they did in January.
If that trend continues it could have serious implications for landlords, who may have difficulty recovering higher costs from rising mortgage interest rates and from other expenses such as insurance and rates, which could put their cash flows under pressure.
It was also significant that the bond data for Auckland CBD, apartments, which is dominated by investors and which has recently been buoyed by the return of international students to these shores, also showed a significant drop in median rents in February.
The median rent for one bedroom apartments in Auckland's CBD declined from $430 in January to $400 in February while the median rent for two bedroom apartments declined from $560 to $530.
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