Housing rents tended to level off in Q4 last year following three quarters of substantial increases

Property / news

The biggest increase in rents last year was for two bedroom units/apartments

27th Feb 24, 2:56pm by Greg Ninness

Residential rents tended to settle in the fourth quarter of last year, after rising relatively strongly in the first three quarters of 2023.

According to the latest data from the Ministry of Business Innovation and Employment's Bond Centre, the national median weekly rent, for all housing types based on bonds received, was $580 a week in the third quarter (Q3) of 2023, unchanged from the previous quarter. However, it was up $30 a week (5.2%) compared to Q4 2022.

Interest.co.nz tracks median rents for one and two bedroom apartments/units and three bedroom houses in all of the main urban districts. Across the entire country the biggest increase in median rents last year was for two bedroom apartments/units. They rose from $530 a week in Q4 2022 to $588 in Q4 2023, up by $58 (10.9%) for the year. The median rent for one bedroom apartments/units increased by $40 a week (9.8%), and median rents for three bedroom houses increased by $35 a week (5.8%) over the same period. (See graph below).

Around the country, the biggest increases in median rents last year (for all property types) occurred in Queenstown-Lakes and Whakatane, both of which were up by $75 a week, followed by New Plymouth and Taupo, both up $70, Hastings and Ashburton up $60 and Auckland up $55.

At the other end of the scale, the median rent in Wellington City was unchanged at the end of last year compared to the end of 2022, while the lowest annual increases were in Dunedin +$10, Nelson +$15, Palmerston North +$18, and Selwyn, Christchurch and Lower Hutt, all up $20 a week.

Within the Auckland Region, median rents in eight council ward areas (refer to ward map below) showed no increase in median rents in Q4 2023 compared to Q3 2023.These were Albany, Waitakere, Waitemata & Gulf, Albert-Eden-Roskill, Howick, Manukau, Manurewa-Papakura and Franklin, while three wards - Rodney, North Shore and Whau, posted quarterly declines.

That left Orakei and Maungakiekie-Tamaki as the only Auckland wards where median rents increased in Q4 compared to Q3 last year.

The comment stream on this article is now closed.

Auckland Council Ward Areas

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27 Comments

by Kate | 27th Feb 24, 3:57pm 1709002626

national median weekly rent, for all housing types based on bonds received, was $580 a week in the third quarter (Q3) of 2023

Requiring a $100,000pa household income to be considered affordable rent (at the 'aggressive end' of rent affordability);

https://calculate.co.nz/rent-affordability-calculator.php

A circuit breaker is most certainly needed;

https://www.interest.co.nz/property/119377/katharine-moody-takes-look-r…

by General Comment | 27th Feb 24, 4:53pm 1709005985

Isn't that slightly above two minimum wage jobs though? Also only about $80pw above the per person charge in some Uni halls of residence.

by Kate | 27th Feb 24, 5:55pm 1709009728

Yes, but don't forget that we have many single income households in NZ; many superannuitants with no other income; as well as many two-income households with children that will have the added burden of childcare.

That's why the Accommodation Supplement paid out is well over $2,000,000,000 per annum.

It's a massive expense/drain on our government books.

by RickStrauss | 27th Feb 24, 5:58pm 1709009920

The supplement is an amazing amount of landlord welfare benefit going out per annum. Thank goodness we've given them a tax cut too to help restore their dignity.

by Pa1nter | 27th Feb 24, 7:03pm 1709013831

The alternative is the government provide the houses.

The government spends 2 billion a year just managing state houses. Then you have to acquire a house, maintain it, pay rates (and maybe insurance).

Sadly, the supplement is much better value for money.

by Kate | 27th Feb 24, 7:19pm 1709014767

The alternative is government regulating the market.

As is evidenced by the ever growing wait list for social housing.

by Pa1nter | 27th Feb 24, 8:00pm 1709017249

They need ever more houses, for sure.

Ultimately there's a cost. I'm not sure how regulation overcomes that. Might make it cheaper to source new houses, depending on what they did.

by Flying high | 27th Feb 24, 8:51pm 1709020290

There is still a place for KO/HNZ as long as we have drop kicks looking for accom

Seems I earn too much to qualify for the supplement, so my tax goes to paying for others to receive it. I rent but have to pay the full rent myself, how sick is that

by Pa1nter | 27th Feb 24, 9:16pm 1709021819

And, many of these houses have free gardening. You have to pay for yours out of pocket, or do it yourself in your own time.

It's a super nice idea, but also not an amazing precedent.

by RickStrauss | 27th Feb 24, 10:00pm 1709024405

Well, yes, subsidising the creation of more supply rather than higher rents to exisiting asset owners would make far more sense. As was done in post-war decades, supply that today's older generations benefitted from in the form of affordable housing.

We shouldn't be handing out welfare to the wealthy in a way that incentivise and rewards speculation on exisiting stock, that's absurd. Next thing you know all the MPs will be speculating on exisiting housing!

by Pa1nter | 27th Feb 24, 10:23pm 1709025832

Well, yes, subsidising the creation of more supply rather than higher rents to exisiting asset owners would make far more sense

Just the dwellings alone would cost 3x-4x as much annually to the state/taxpayer - someone's paying the subsidy. Then you'd have to also cover rates, insurance, maintenance and management of what is a depreciating asset. So probably closer to 5x as much.

And at the rate we can build these, it would take 43 years to supply enough for 2024 levels of requirement.

How would that make more sense? How would this additional expense be funded? And are you also against subsidizing the food industry by giving people in need money for food?

by Nzdan | 28th Feb 24, 9:42am 1709066556

Given rent is the first expense one must pay, in a round about way a food grant just enables rents to be higher.

A food grant is not to subsidize the food industry, but to compensate for the fact that rent is too high and there's not enough left for people to eat.

by K.W. | 28th Feb 24, 11:22am 1709072553

I think you mean deregulating the market. Regulation is what has caused the shortage in rental housing in the first place, reducing supply, which increases rents. More regulation will simply result in even lower supply, and even higher rents.

by malamah | 28th Feb 24, 10:00am 1709067603

The argument is that the rental market is "free", and the supplement influences the market much more than the face value of $2b. If all accom supplement was for rentals, it would account for $100 per rental per week. If it were half of all rentals, $200 per rental per week. So how much of the average cost of rentals has been influenced by this supplement?

Pumping an asset and population bubble in the face of housing woes while compensating with a benefit which costs renters much more than the value given, that's big mistake.

I would rather the government creating jobs by spending on workers to maintain our housing stock than a supplement which is paying interest on a loan backed by a derelict house.

by Cheetahlegs66 | 27th Feb 24, 7:37pm 1709015827

Not a tax cut but ability to deduct interest payments. Note the Tax Working Group advised against Labour stopping the deductibility. Details matter

by Kate | 27th Feb 24, 9:38pm 1709023096

I think the new government is reversing that (i.e., they will be restoring normal business tax rules for residential rental accommodation providers).

by K.W. | 28th Feb 24, 11:29am 1709072954

Yes, its funny how I can borrow against my house to buy shares in a property company, then tax deduct the interest bill against the dividend payments. My actions in buying property company shares adds no discernible value to the economy (other than allowing a fellow investor to cash up), but the idea of buying a second house for a needy family to live in is considered so offensive that tax deductions should be disallowed, while tens of thousands of families are homeless and waiting for the Govt to build them a house to live in. Yes, its a funny world indeed.

by CN - new | 28th Feb 24, 2:56pm 1709085397

"the idea of buying a second house for a needy family to live in is considered so offensive that tax deductions should be disallowed, while tens of thousands of families are homeless"

Non owner occupiers owners of existing real estate are motivated by profit - recently the key incentive has been mainly tax free capital gains.

Any government policy that adversely impacts profitability also adversely impacts their vested financial self interests. Those with vested financial self interests will have their justifications, and narrative for maintaining the status quo.

Here's another perspective.

The previous government policies levelled the playing field between owner occupier buyers and non owner occupier buyers in the existing house market.

Previously owner occupier buyers were at a huge disadvantage to non owner occupier buyers, and as a result, non owner occupier buyers were outbidding owner occupier buyers. There were non owner occupier buyer buying syndicates which resulted in an even larger ability to outbid owner occupier buyers.

Regardless of those policy changes, many non owner occupier buyers continued to outbid owner occupier buyers in the existing house market as they could continue their tax and financing advantages (interest only, deposit recycling) when the houses were rented to social housing providers.

(Note: this has led to the the highest rates of unaffordability for owner occupier buyers and the lowest home ownership rates in NZ for quite some time.)

Non owner occupier buyers could continue their tax advantages in the new build market - an incentive to build more residential dwellings.

by Flying high | 27th Feb 24, 4:54pm 1709006078

Rents are up over 10 percent for some. Possibly its because new places are replacing old which means the median rents will migrate higher.

by Property Leader | 27th Feb 24, 4:15pm 1709003738

My observation in Nelson / Tasman is the reported increase is pretty close to correct. Typical increase across 25 rentals in family portfolio is $20PW. Main reason for rent increase was tax and insurance increases.

by Cheetahlegs66 | 27th Feb 24, 5:37pm 1709008629

Did you explain to the tenants that the increase resulted in part due to the loss of interest deductibility?

by HGWR | 28th Feb 24, 9:35am 1709066106

I'm sure they can't wait for the backdated rent cut once it's reinstated.

by RickStrauss | 28th Feb 24, 11:55am 1709074513

They'll be glad to see it go down after the reinstating of interest deductibility, eh?

by John Mendel | 27th Feb 24, 9:37pm 1709023061

Don't worry, Chris Bishop will take care of you

all you have to do is wait 10 years ;)

by K.W. | 28th Feb 24, 11:30am 1709073059

Hopefully National will still be in Govt by then, otherwise it will have all been for nought

by youngdumbandfullofit | 28th Feb 24, 10:06am 1709067993

Good news for inflation if they're settling, let's see what RBNZ say today

by Jay Lim | 28th Feb 24, 10:53am 1709070827

I think they will fix the rate while hinting a hike next time.