The national median rent charged for newly tenanted residential properties remained unchanged at $600 a week in the March quarter for the fifth consecutive quarter, according to interest.co.nz's latest analysis of bond data from Tenancy Services.
This shows the national median rent first hit $600 a week in the first quarter (Q1) last year and has stayed there ever since. (See the graph below).
In Auckland, the country's largest rental market, the median rent has remained at $650 a week for six of the last seven quarters.
This would appear to contradict recent reports from property websites such as Realestate.co.nz and Trade Me Property noting the average and median rents being advertised on those sites were in decline.
So if advertised asking rents are falling, why isn't this showing up in bond data, which records the actual rents being agreed to when tenants sign up for a property?
The two most likely reasons are a timing lag and value drag.
There is usually a timing lag of at least a month or two between a property being advertised for rent and the bond being sent to Tenancy Services.
So if the rents being agreed are declining, this might well show up in the bond data over the next few months, although there was no sign of that happening in the monthly bond data for March, as well as for Q1.
The other possibility is value drag.
Most people looking for a property to rent will have an idea about how much rent they can afford to pay at the back of their mind when they are searching, and will try to get the best property they can around that amount.
If rents are falling, they may not end up paying any less rent, but sign up for a slightly better property than they might otherwise have found at the same price point when rents were higher.
So the rent they pay stays the same, but the value they get for their money has crept up a bit.
Either way this is good news for tenants, who either get the benefit of lower rent, or take advantage of a higher standard of rental accommodation at no extra cost.
It's not such good news for landlords though because one thing is clear. Regardless of whether rents are declining slightly or are static, there is absolutely no sign of any rental growth in the current market.
16 Comments
One needs an annual household income before tax of roughly $110,000 in order for a $600/week rental to be affordable according to this calculator;
https://calculate.co.nz/rent-affordability-calculator.php
Getting there for dual-income households;
https://www.stats.govt.nz/information-releases/labour-market-statistics…
But still very difficult in certain areas/regions, where rent doesn't reflect the majority lower-income population.
And let's not forget the household incomes in those statistics include all transfers (i.e., WFF and A/S).
IRD says that an individual on $110k pa will get $1612 net pw after tax (plus any additional credits & transfers). So, $1k/wk (62.5%) remaining after $600 rent.
Looks to be affordable. (Calculate doesn't appear to state any criteria for determining it's scale of affordability). Average household income is $134k pa, median $122k.
In many/most of those "certain areas/regions", rent would reflect the majority lower-income population. Rent is primarily determined by peoples ability to pay.
There's a lot less of a gap between rents in regions compares to cities, in some cases it's worse, because they haven't built at the scale of the likes of Christchurch and Auckland.
Good and promising news. Be great to see them back at $450pw in 2026.
Why not just free?
I had to get an extension priced up recently. Super basic construction, shell only. 4 grand a square, averaged between multiple quotes, in a fairly flat construction market. So closer to 5, once fitted out inside.
Doesn't look good for future affordability.
In 2019 I built a high custom spec, architectural design house for <$5k /m2
A relative in Oz sent me this recently, I wondered what the same calculation would be for NZ
It's hard to define what people consider "high end". I'd usually consider it a bespoke architectural jobbie, which I'd call closer to $10k and up.
Yep. Had a friend get caught mid build over covid and ended up paying through the nose on everything - no fixed cost. Was bespoke architectural and was $10k per sqm.
I've found out the long way that most of these builds are labour and materials rather than fixed price.
Some of that's to do with the one off nature of most of these, everyone's effectively learning how to construct them as they go, no uniformity.
Yes - NZGecko I agree. Very promising news. Good to see Landlords as a whole stripped of some pricing power.
In current property glut, with lower arrivals and local fleeing to Aust, tenants should demand rental price cuts from their landlords of $50 to $100pw or tell them they are gone.
Take it or leave it LL.
Sounds like you've just solved the cost of living crisis, just demand lower prices, and ye shall receive.
Why back to $450 pw? Why not $300 pw?
If you're playing a game of "what would you wish for, if you had a million wishes", it's more titillating if the wishes sound remotely plausible.
Rents flat and easy to move to less, less immigration, youth renters voting west, prices sliding, masses of unsold stock and economy still far from good. Great time for spec town... Tui.
The main issue is that if capital growth is not there as much, the return has to be more yield-driven with a Gross yield of approx. 10%.
On existing properties with enough equity, this is easy enough to do as you can just revalue your property, ie lower the price, to achieve that rate.
For new builds, it's a problem as materials and labour are more expensive, but there is plenty of scope in the over-inflated land prices, unless you have already paid these prices.
Up until now, few if any land bankers or developers who have paid the landbank price have taken a hit in the market. I think it is about their turn.
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