No growth in residential rental income for landlords as the number of newly tenanted properties hits a 10-year high for the time of year as the median rent goes backwards

Despite a surge in the number of newly tenanted residential rental properties in July, median rents declined.

The latest bond data from Tenancy Services shows 15,246 new tenancy bonds were received from throughout the country in July, up 14.5% from June, and up 12.5% versus July last year.

At the same time the median rent for those properties declined for the second month in a row to $590 a week, down from $600 a week in May and $595 in June.

That took the national median rent being charged on newly tenanted properties back to where it was in July last year.

July is usually a reasonably busy month for new tenancies, but the number of bonds received for tenancies starting in July this year was at a 10-year high for the month of July.

The high number of new tenancies being signed up combined with a slight decline in the median rent, suggests there is a good supply of rental properties available, giving potential tenants plenty of choice.

That also showed up as a surge in new rental listings on property website Realestate.co.nz.

There could be several reasons for the increase in the supply of rental properties, including:

• Rising construction of new homes, many of which end up in the rental pool when completed.
• Existing homeowners choosing to keep a home and rent it out rather than sell into a soft resale housing market.
• Relatively robust first home buyer activity, many of who will give up a rental property to move into their own home.

The latest figures suggest that on average, there has been no significant rental growth for almost three years, and some landlords may have had to accept a small reduction in rental income to re-let a property after a period of vacancy.