Rental market squeezed by higher rents and fewer new tenancies

Property

Rents on new tenancies rise 4.5% nationally and 13.7% in Auckland as the residential property market tightens

22nd Dec 14, 2:00pm by Greg Ninness

<a href="http://www.shutterstock.com/">Image sourced from Shutterstock.com</a>

There was a significant drop in the number of new residential tenancies in November compared with a year earlier and a rise in median rents, suggesting the rental accommodation market is continuing to tighten.

The Ministry of Business, Innovation and Employment, which holds tenancy agreements and bonds on behalf of tenants and landlords, received bonds for 3196 new residential tenancies throughout New Zealand in November, a 29.8% drop from the 4553 bonds it received in November last year.

The median rent of those new tenancies was $370.01a week, up 4.5% compared with the median rent of $354.08 in November last year (see table below).

However there were substantial regional differences, particularly in Auckland where high population growth fuelled by strong immigration and an inadequate level of new building activity are combining to put significant pressure on the rental market.

In the Auckland region there were 733 new tenancies recorded by MBIE in November, down 45.3% compared with November last year, while the median rent of $492.93 a week was up 13.7% on November last year.

Within the region the increase in median rents ranged from 2.3% in Manukau, which went against the trend and recorded an 88% increase in the number of new tenancies in November, to an 11.6% rise in median rents in Rodney, where the number of new tenancies in November was down 37.8% compared with last year.

In the Wellington region, the median rent dropped 1.4% in Porirua but was up 10.6% in Lower Hutt and up 4.3% in Wellington City.

In Christchurch the median rent was up 4.7% while the number of new tenancies was down 18.6%.

Although median rents rose in most parts of the country compared to November last year, 13 districts recorded a fall in their median rent, with the biggest decline occuring in Buller where the median rent dropped by 20%, from $250 a week in November last year to $200 a week last month.

The next biggest declines ocurred in Wairoa -13.9%, Gore -11.6% and Central Hawkes Bay -10%.

See the chart below for the full list of median rents and the number of bonds received in November for all districts throughout New Zealand, compared with November last year.

	Median Weekly Rent		% Change	No.of New Bonds Rec'd		% Change
	Nov-13	Nov-14		Nov-13	Nov-14
Far North District	260	260	0.0%	64	47	-26.6%
Whangarei District	300	320	6.7%	114	88	-22.8%
Kaipara District	245	250	2.0%	7	15	114.3%
	------	------	------	------	------	------
Northland	284.08	294.20	3.6%	185	150	-18.9%

Franklin	350	390	11.4%	76	56	-26.3%
Thames-Coromandel	290	297	2.4%	30	14	-53.3%
Rodney District	430	480	11.6%	90	56	-37.8%
North Shore	500	520	4.0%	203	165	-18.7%
Waitakere	410	440	7.3%	213	186	-12.7%
Central Auckland - All Properties	515	550	6.8%	350	256	-26.9%
Central Auckland 1 brm apartments	350	367	4.9%	311	276	-11.3%
Central Auckland 2 brm apartments	445	460	3.4%	320	209	-34.7%
Central Auckland 1 brm flat	300	320	6.7%	160	117	-26.9%
Central Auckland 2 brm flat	380	410	7.9%	273	200	-26.7%
Central Auckland 2 brm house	420	440	4.8%	143	101	-29.4%
Central Auckland 3 brm house	515	550	6.8%	350	256	-26.9%
Manukau	430	440	2.3%	321	598	86.3%
Papakura	380	400	5.3%	57	131	129.8%
	------	------	------	------	------	------
Auckland	433.66	492.93	13.7%	1340	733	-45.3%

Waikato District	270	300	11.1%	49	39	-20.4%
Hauraki District	242	232	-4.1%	20	14	-30.0%
Matamata-Piako District	280	290	3.6%	49	38	-22.4%
Hamilton City	340	350	2.9%	239	164	-31.4%
Waipa District	310	332	7.1%	49	56	14.3%
Otorohanga District	220	240	9.1%	11	8	-27.3%
South Waikato District	200	190	-5.0%	28	30	7.1%
Waitomo District	230	210	-8.7%	11	9	-18.2%
Taupo District	290	310	6.9%	71	57	-19.7%
Western Bay of Plenty District	285	305	7.0%	56	36	-35.7%
Tauranga District	350	372	6.3%	191	142	-25.7%
Rotorua District	275	277	0.7%	117	92	-21.4%
Whakatane District	300	295	-1.7%	54	38	-29.6%
Kawerau District	170	202	18.8%	11	12	9.1%
Opotiki District	190	217	14.2%	7	6	-14.3%
Gisborne District	277	280	1.1%	58	45	-22.4%
Ruapehu District	162	185	14.2%	12	18	50.0%
	------	------	------	------	------	------
Waikato/BOP	301.82	310.07	2.7%	1033	804	-22.2%

Wairoa District	180	155	-13.9%	7	9	28.6%
Hastings District	310	297	-4.2%	77	84	9.1%
Napier City	320	330	3.1%	88	49	-44.3%
Central Hawke's Bay District	200	180	-10.0%	17	15	-11.8%
	------	------	------	------	------	------
Hawkes Bay	299.95	296.07	-1.3%	189	148	-21.7%

Wanganui District	237	220	-7.2%	58	46	-20.7%
Rangitikei District	190	195	2.6%	15	12	-20.0%
Manawatu District	270	280	3.7%	25	19	-24.0%
Palmerston North City	295	310	5.1%	129	100	-22.5%
Tararua District	182	197	8.2%	24	20	-16.7%
Horowhenua District	230	230	0.0%	41	45	9.8%
	------	------	------	------	------	------
Manawatu/Wanganui	257.53	260.62	1.2%	292	242	-17.1%

New Plymouth District	350	360	2.9%	88	58	-34.1%
Stratford District	240	250	4.2%	15	7	-53.3%
South Taranaki District	230	237	3.0%	35	38	8.6%
	------	------	------	------	------	------
Taranaki	307.61	307.15	-0.2%	138	103	-25.4%

Kapiti Coast District	330	360	9.1%	61	49	-19.7%
Porirua City	360	355	-1.4%	35	35	0.0%
Upper Hutt City	367	370	0.8%	34	27	-20.6%
Lower Hutt City	350	387	10.6%	86	68	-20.9%
Wellington City	460	480	4.3%	132	103	-22.0%
Masterton District	250	270	8.0%	25	45	80.0%
Carterton District	250	250	0.0%	10	14	40.0%
	------	------	------	------	------	------
Wellington	381.44	389.13	2.0%	373	333	-10.7%

Tasman District	350	350	0.0%	47	25	-46.8%
Nelson City	350	360	2.9%	59	48	-18.6%
Marlborough District	300	320	6.7%	65	44	-32.3%
	------	------	------	------	------	------
Nelson/Marlborough	330.99	342.82	3.6%	171	117	-31.6%

Buller District	250	200	-20.0%	13	13	0.0%
Grey District	245	272	11.0%	12	12	0.0%
Westland District	265	355	34.0%	8	9	12.5%
Waimakariri District	365	400	9.6%	20	16	-20.0%
Christchurch City	430	450	4.7%	350	285	-18.6%
Banks Peninsula District	382	400	4.7%	6	13	116.7%
Selwyn District	400	450	12.5%	25	14	-44.0%
Ashburton District	340	325	-4.4%	33	24	-27.3%
Timaru District	290	300	3.4%	44	20	-54.5%
	------	------	------	------	------	------
Canterbury/Westland	398.14	414.83	4.2%	503	392	-22.1%

Queenstown-Lakes District	380	430	13.2%	59	45	-23.7%
	------	------	-------	------	------	------
Central Otago Lakes	380.00	430.00	13.2%	59	45	-23.7%

Central Otago District	280	320	14.3%	23	15	-34.8%
Waitaki District	250	260	4.0%	34	17	-50.0%
Dunedin City	300	310	3.3%	103	77	-25.2%
Clutha District	190	200	5.3%	5	8	60.0%
	------	-------	-------	-------	------	------
Otago	283.58	296.50	4.6%	165	117	-29.1%

Southland District	200	245	22.5%	12	12	0.0%
Gore District	215	190	-11.6%	14	26	85.7%
Invercargill City	235	217	-7.7%	79	128	62.0%
	------	------	------	------	------	------
Southland	180	245.00	36.1%	105	166	-88.6%

	=====	=====	=====	=====	=====	=====
NZ total	354.08	370.01	4.5%	4,553	3,196	-29.8%

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32 Comments

by Zombie ponzi | 22nd Dec 14, 3:00pm 1419213619

If the biggest increase in any part of Auckland is 11% and the increase in most parts of Auckland is 4-7%, then the only way the overall increase can be 13% is if people are renting in different places?

For example more bonds lodged in more expensive rental areas, but it doesn't mean landlords have raised rents by an average of 13%. Very misleading.

Any year rents rise faster than wages/inflation must be a good one for landlords!

by cowboy | 22nd Dec 14, 3:59pm 1419217159

"Any year rents rise faster than wages/inflation must be a good one for landlords!"

Nah, as it usually means it's being pushed up by interest, insurance or rates increases being passed on.

by Happy123 | 22nd Dec 14, 3:48pm 1419216521

And these figures still don't include increases on existing tenancies, you'd see even higher medians if there was a way to capture that data.

by cowboy | 22nd Dec 14, 3:54pm 1419216845

IRD have those figures through their IR3r's it has the rental gross income at the top and the property value and purchase data and materials at the bottom, and the location at the very top. Even have the tenancy (letting) time.

by fat pat | 22nd Dec 14, 5:18pm 1419221900

Yep, I mentioned the IR3R's with respect to Nick Smith's claim of 11% of landlords being non-resident. The IRD has the info, but It's not being released. There's no political will.. in fact it's quite the opposite.

by two otherguys | 22nd Dec 14, 7:23pm 1419229383

You know why it's not published, dont you?

by fat pat | 22nd Dec 14, 8:21pm 1419232903

Yes TOG I think I do. It's because we have an ultra right wing National government who's intention is to quietly sell every single asset in the country without creating political backlash. Our prime minister does not want to be associated with killing kiwi the dream of home ownership. Moreover, climbing the greasy pole in a the public service like the IRD means being perfectly aligned with the views of the current government. I mean look what happened to poor old Adam Feeley at the SFO, hung out to dry for doing his job. Shame on him.

by David Chaston | 22nd Dec 14, 8:30pm 1419233451

Come on everyone. It's Christmas. Extremes of paranoia and fanciful conspiracy theories over immigration might be better suited to the depths of winter ... Lighten up.

by Basel Brush III | 22nd Dec 14, 8:53pm 1419234807

The poor renters do not get any relief at Christmas so why should anybody be charitable to the greed of landlords?

Sorry DC, take it on the chin.

Happy New Year.

2015 will tell a new tale.

by cowboy | 23rd Dec 14, 9:16am 1419279374

I give long term tenants (those more than 52wks continuous rent) who haven't had significant problems caused by them, a rebate of a week rent. I budget on 50wks occupancy, so I figure its just spliting the love - I'm still up a week, they're up a week they didn't expect. fair'nuff.

by Simon | 23rd Dec 14, 9:23am 1419279810

Yeah Ive got some fantastic tenants in palmy who never ask for anything, always pay rent like clockwork without exception, paid a total of $110 in maintenance over 2 years as they tend to sort minor things out themselves.. Tell me how much they love the house everytime Im there... Just means I don't ask for a rent rise as Im too worried about losing such quality tenants, so they end up winning as well as over time what they are paying is good value

by two otherguys | 22nd Dec 14, 10:14pm 1419239658

Your response is a bit of a surprise there Mr Chaston

Did you actually read Fat Pat's comment

I realise the written word is a most difficult form of communication, but

Seriously, how did you get to immigration?

Paranoia? Sheer humbug

Immigration was furthest from my mind in my response. Didnt even arise

Care to explain?

What does arise out of this comment segment is the fact that the IRD can produce factual data, as was clearly evidenced last week by your scribe, Terry Baucher

Yet instead of seeking factual information and informing your audience, you prefer to dwell in the twilight zone of second-hand mis-information and fanciful utterances by politicians. Sometimes balance is good. Maybe Terry Baucher will read this. And, maybe you might invite him to participate more frequently. He is really good value. Factual. Informative.

by Value Added | 23rd Dec 14, 2:44pm 1419299083

For those of us in our 30's who are watching the kiwi dream of owning your own home quickly fade (I can't save an extra $50k a year just to keep up with house price increases) there's really not much to lighten up about.

Some of the landlords on this thread sound like nice people, but for those of us who don't have good landlords, a life of renting can be pretty sh*t.

by Value Added | 23rd Dec 14, 2:45pm 1419299128

Whoops, posted twice...

by raegun | 22nd Dec 14, 9:40pm 1419237615

One non-resident foreign landlord is one too many

by fat pat | 22nd Dec 14, 10:34pm 1419240865

Yes it's totally crazy isn't it. 11% ! Even more crazy when you consider that many foreign landlords will have properties in trust. They'd probably work hard to make sure their trusts weren't "non complying foreign trusts" taxed at 45c in the dollar. That means NZ domiciled trustees / settlors. That means the IRD wouldn't recognize those entities as foreign. That means 11% is almost certainly an underestimate. SOrry a little off topic but I get hot under the collar about this issue.

by cowboy | 23rd Dec 14, 9:33am 1419280433

But of course. As supervisory function government rewards what it wants more of (foreign ownership with offshore profit laundering and givers of perks) and penalise that which you want less of with more costs and legislation (dairy, FHB, NZ businesses).

It's a solid policy of transformation because of the financial limitations inherent in the system it can't fail.

by Your Landlord | 23rd Dec 14, 12:31am 1419247906

These figures prove what I have been asserting... all's well in landlord land. Absolutely no complaints from this long-term investor.

by PeterPen | 23rd Dec 14, 10:22am 1419283332

So true. There is hardly a country in the world in which landlords have legally as strong a standing as in NZ. Plus there is still decent money to be made, esp. when one bought early enough.

by cowboy | 23rd Dec 14, 10:57am 1419285434

That's because a sizeable amount of the world is Third World (ie defined as State owned) or in population terms still affected by Communism. Several that are left suffer from rampant Socialims (which tends towards Third World in property ownership)

by PeterPen | 23rd Dec 14, 10:18am 1419283086

11% non-resident - how many of these are Kiwis who are living/working overseas?

I have a lot of friends who left NZ in search of a job in the past years, when times were meagre. No, they did not sell, as they may want to return one day. Most rented their places out.

I guess the mainstream here would have wanted them to stay in NZ on dole. True patriotism.

Incidentally, walking down Queen St there is hardly a shop not run by Asians these days. Were the original owners coerced to sell mafia-style ... or did they want to make a quick buck? Jees, guys, why not get mad at the greed of the people who sell to the evil "non-resident"?

by iconoclast | 23rd Dec 14, 11:38am 1419287935

Yes, you are quite right, it's also quite possible that the entire 11% are comprised of nz nationals who have moved overseas while retaining ownership of their property. Should that be the case then any angst aimed at landlords who are classified as "foreign nationals" is misplaced

It's also possible that the 11% is understated

It's certainly not overstated

However, the IRD possesses data that can differentiate between a non-resident rent-receiving taxpayer who has had an IRD number for many (say 20+) years, and a rent-receiving landlord who has just obtained their IRD number recently

Statistics NZ doesnt have that information

by cowboy | 23rd Dec 14, 11:48am 1419288481

Provided that they don't disclose the private identities Statistics NZ has the legislative right to request that information from IRD, should they so choose. Especially since they know that IRD already have ALL that data already.

by PeterPen | 23rd Dec 14, 12:01pm 1419289291

Well, then we simply don't know, even though raw data must exist.

And in any way, these days it is often hard to distinguish who is "true blue" Kiwi and who is not. I usally think that school socialisation is a strong factor, but I know e.g NZ Sri Lankans who are 3rd generation New Zealanders but totally live within their own community and marry only among each other or back "home". Totally racist, really. On the other hand I know e.g. Swiss and Germans who behave like chameleons and try to be Kiwier-than-thou although they are only in NZ for a few years and will niver-iver get the accent right :-)

Having said all that I am of course not happy either that the country is sold out to just about anyone incl corrupt Commie party scum. Some kind of legal restriction would be fair, given that NZ is tiny relative to the huge money sitting e.g in China. However, be aware that it will somewhat deflate the bubble, if it really was to happen. I dont care personally, because I hardly carry debt, but I bet a lot of people here feel differently about it.

by BigDaddy | 23rd Dec 14, 11:47am 1419288425

Hang on a minute.

Only last week you were trumpeting that rents were "stuck in the mud"

http://www.interest.co.nz/property/73367/rental-growth-slows-auckland-r…

Now it's all changed again.

Will the real story please stand up?

by cowboy | 23rd Dec 14, 11:54am 1419288873

Ok. trumpets please. Real Story is

news and opinion sells media and adverts.

Facts don't.

Ok. thats all folks.

by Stephen Hulme | 23rd Dec 14, 11:59am 1419289151

I can recommend other publications if you seek the solace of academic rigour.

by rastus1 | 23rd Dec 14, 12:03pm 1419289417

....I guess someone always has a story like this at any time..but it's a first for me. Landlord with 60 rentals has crunched the numbers recently... baby boomer who is ready to slow up...has decided that the cap gain has come to end and will be cashing up fully....will have 4 x cash in hand from low risk alternatives. How many more out there thinking same ways i wonder? Very fine tipping point.....just how far aways away is the question?

My new years pick....when she blow it will sooner, big and quick...

by cowboy | 23rd Dec 14, 12:10pm 1419289814

also best get clear before the taxman cometh. They like to close the door (CGT) then go for the throats (remove/degreade expenses increase compliance)

by PeterPen | 23rd Dec 14, 12:11pm 1419289881

Look around the world. Which government has allowed a real estate bubble to burst for good? In the UK, Spain, Ireland etc etc etc there was a short price deflation followed by frantic money printing to reflate - and it worked.

Not that I like the situation. I think it is crazy and in the long term destructive. But the politicians are hell bent on it, the central and other banksters happily assist and the media cheers a big hooray.

Today NOTHING is safe, also as a result of money printing policies. If I had 60 rentals and retiring I would also sell out some, fix up the kids, spend on a few things I always wanted to do. But there is no rush and panic in the move.

by Brendon | 23rd Dec 14, 2:01pm 1419296489

Yet in the 1930s governments allowed the real estate bubble to burst by opening the floodgates to new construction to escape the Great depression. Monetary policy following escape from the Gold Standard allowed private home builders, primarily around the new tube stations in England and state house building in NZ to kick start the respective economies.

Google Escaping liquidity traps by Nicholas Crafts.

by PeterPen | 23rd Dec 14, 12:04pm 1419289476

Btw, very useful table. Anyone know who owns the copyright? Or is it public domain?