Hefty rent hikes in Auckland, BoP, Waikato and Otago push the country's median weekly rent up 5% from a year ago

Hefty rent hikes in Auckland, BoP, Waikato and Otago push the country's median weekly rent up 5% from a year ago

Renters throughout the country are paying around $1000 a year more than they did a year ago.

Trade Me Property figures show the country’s median weekly rent has increased by 4.8% to $440 over the year to May, while the median weekly rent in Auckland is up 6.1% to $520.

Head of Trade Me Property Nigel Jeffries says: “Renting a typical property in Auckland will set you back more than $27,000 a year, that’s up $1500 since May last year and a hefty $5000 increase since May 2011.”

The rental market’s version of the ‘halo effect’ is also continuing in areas surrounding Auckland. 

Rents in the Bay of Plenty have risen 8.8% to $400 a week, where it has been stuck for the past 4 months. The Waikato has seen a 7.5% increase to $360 a week, and Northland a 4.9% rise to $420.

However, it's a different story in Christchurch, where weekly rents have fallen 9.1% over the year.

“Christchurch’s rent adjustment after the peak of the rebuild began in May 2015 when we saw the median weekly rent fall more than 2% year-on-year. We’re still seeing that adjustment as supply strengthens, pushing the median weekly rent down to $400 a week, and back to where it was three years ago,” Jeffries says.

Across the rest of the country tenants continue to experience significant rises in weekly rents compared to May 2015.

Leading the charge is Otago’s increase of 16.7%, to a median weekly rent of $350, which equates to around $50 a week more than the previous year.  

“It’s still below the peak rents we see in the region though – these tend to emerge in August when the seasonal winter demand kicks in,” Jeffries says.

Trade Me Property notes small houses (1-2 bedrooms) have experienced the greatest increases in median weekly rents as tenants seek to manage their housing costs at the same time as investors pile into smaller properties at affordable prices.

The weekly rent for a small house has risen 4.5% across New Zealand in the past year to $350, underpinned by Auckland’s new record high of $430 a week.

Meanwhile larger houses (5+ bedrooms) are witnessing a much weaker market. Both Wellington and Christchurch have seen annual falls in weekly rents, as Auckland properties have ticked up almost 4% to $790 per week.

Jeffries says that the median weekly rent for the “humble unit” is not breaking records around the country, but is still outstripping other urban properties. Both Auckland and Wellington have seen median weekly rents for units rise 5.1% in the past year, up to $410 and $310 a week respectively.

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Neatly 'splained by a leaflet dropped in by a local property firm just yesterday:

  • Changes to insulation, heating etc rules will see more $ needed for these especially in older houses.
  • Recent court ruling that sees landlords now responsible for repairs resulting from tenants' "accidental" damage. Prediction: all tenants will claim all damage "accidental", landlords will purchase expensive insurance to cover this likelihood.
  • Compliance costs and increased pressure on landlords will see massive move from DIY PM to managed property regimes (90% coverage in Oz). The extra 10-15% ticket-clip will be cheerfully swallowed by landlords - oh - wait....

There was another one but advancing age and the screams of Interest electrons, tortured enough already, compel me to [omit] it.

A hint plse

Shortage of Stock

Not so in Auckland so much as high prices, but very true in Wellington, Hamilton and Tauranga. Otago is mostly noise due to the special nature of renting down there.

http://listings.jonette.co.nz/blog/rental-vacancies-moving.html

I wish I had time to go back over all the old posts with so many comments saying "rents can't rise..", "rents can't go up unless incomes do". It was an absurd position to be stating that even though house prices are rising rents won't follow.

My concern is incomes! Incomes aren't rising much (excluding construction and related sectors) so higher rents means less disposable income, or worse, less/no income left over for essentials.

These rent increases were so obviously predictable. No one should be surprised.

My rent has gone up $5 in 3 years M, however I now have a seaview and all appliances thrown in, figures are dubious but probably correct in Auckland as the speculators/ overseas landlords leave them empty.

When I sit here in a place with a sea view also, and no rent rise in 7.5 years, I find the increase rent claim a little unbelievable.

12
up

yes that is the concern as rents outstrip wages then less is avaliable to be spent on consumables and the local economy goes backwards.
buts that alright we can top that spend up by bringing in more immigrants who will need to spend up large when they arrive to set themselves up
not my idea of a well run economy

The price of land in Auckland is higher than Sydney, thanks to the Auckland councils inane land supply restrictions. Therefore the value of rent in Auckland needs to climb higher than Sydney, before we can expect building rates sufficient to cater to demand and ease our building shortage.

Is it likely that having rents in Auckland higher than Sydney is conducive in the long-term to tenancy by business? Hell no. When the current property boom ends we are likely to see an exodus of corporates from Auckland, because - unlike Brisbane, Melbourne, Sydney, Tauranga, Silverdale - the City of Auckland has a very weak construction sector.

'Auckland councils inane land supply restrictions' are actually Auckland councils inability to fund the infrastructure needed to service the population growth caused by out of control immigration. If you want to blame unaha-closp, blame the govmnt.

Auckland Council is adding an excessive amount of new infrastructure and finding very little difficulty to do so. Auckland Council has taken the decision to spend the equivalent of 75% of a typical infrastructure budget on developing Warkworth, Silverdale, Kumeu, Clarks Beach and Pukekohe. But has decided to halve the spend on Auckland. End result is we are getting 50% the bang for 125% of the buck.

We could save rate payers lots of money and accommodate way more growth

cool - cant wait for my tenants to move out so I can put the rent up again! On the other hand I hope my landlord doesn't put my rent up.

but your landlord is providing you a service you should be quite happy about paying for that LOL

ha ha yes a service indeed nod nod wink wink. I see the world from both sides of the looking-glass. Being a landlord is all about capital gain and cashflow. Its ridiculously easy "work".

Rent in time to come will move up to reflect the current high house price. If the average house is million than assuming return of 4% so should be appox $40000 plus $5000 to cover rates and insurance. So average weekly rent will easily be $865.

First home buyer who now cannot afford to buy house ( by choice as per JK) in future will not be able to afford rent also. Will than be welcome to stay in Car or may be will buy Van for extra luxary under national government and if national still in power will come and say that living in Car is also by choice as more flexiability.

Or house prices will come down to reflect the low yield. Renters tend to be poorer than homeowners, so you will have an empty house or take market value.

Or low yields will become the new norm and things will stay as they are.

Most people can't afford their rent now. 70%+ are on accommodation supplement

Well, looks like it is Open season again on landlords ... and half brained commentator on this subject should do a bit of research and they will find out that the costs of running a rental increases by almost $1000 a year and that goes to rates, CPI, insurance, PM, "small' regular maintenance and services to the property ( does not include any changes in Interest rates) ....the "tenants" and most of their advocates want to be
immune to all these costs and not pay as they go.... By the way, all these costs DO OT GO in the landlords pocket ...it does oil the economy though.
When will everyone start having a mature conversation about this ( and house prices) rather than moaning like teens who still need to be spoon fed.
Oh, has any body thought what will happen if Landlords throw in the towel and gave up the hastle of their business ... how many homeless people will there be ...maybe enough for all TV stations to cover them 24/7....
Financial illiteracy is a big problem and yelling at each other wont solve the issue

If Landlords through in the towel, hmmm let me see the house would stay empty....or by crikey FHB WOULD BUY THEM !
also "small' regular maintenance and services to the property" were what by whom...apart from mowing lawns never seen this take place?

Well if a paltry 1K P/A increase in costs disturbs a landlord, then the Landlord should get a real job.
Do em good. Cause they obviously can't manage a business properly.

@Eco Bird

What is scary is that:

1. You are serious and believe this nonsense
2. You are only one of many....

If landlords throw in the towel then a load of houses come onto the market, and maybe many would be bought by those actually wanting a HOME.

To say there would be more homelessness is absolutely unadulterated BS.

If you want to be landlord and make some money, or provide for your retirement then fair enough - BUT to perpetuate this nonsense you provide a social service is hilarious. Who are you trying to convince?

And I own a rental property...

evita, I think we will see more people in cars and vans if labour/Green come to power (heaven Forbid) ... their rusty outdated social policies will do much more damage than repair ... the Nats are not perfect , but who is? .. however, I guess in most of the cases they are at least Fair ....

Looking forward to some government or other to re-establish order and put people and their having homes to live in first, as opposed to just a roof over their head, especially if that is a car roof. National has led us to the most spectacularly bad situation where housing goes that I, certainly, have ever seen. Their mismanagement is monumental and will not be easy to rectify, and it will have to be started to be done at some point.

Were there stories about car living when the Helen was running the show?
Stop making out the opposition is so bad - JK is all smoke and mirrors.Fix immigration and you will start to fix housing.

how do you know what they would have done, "as it never happened".
we can only question what the current government is doing and how we disagree with the direction they are taking us as that is happening now not some thing that may or may not happen in someones mind

I understand that opposition is not strong but need of the hour is that national should go as have become arrogant n can be seen from the absolute rubbish insensitive comment comming from them.

Do not want to act on housing crisis is not as annoying as denial and lie from them. This happen when one is so arrogent that feels everyone is stupid with no brain and will not understand but they do not understand that are totaly exposed.

The Nats have pumped this economy with 100 billion borrowed $ and multiple 100,000's of immigrants Eco Bird.
The current National govmnt is going to be the biggest financial disaster this country has ever seen.

According to Stats NZ last quarterly CPI figures rents have risen 'only' 2.3 percent nationally and 3.2 percent in Auckland. I assume the trade me figures are asking rents only, not actual. Bottom line if the number of properties being acquired are for rental have increased to 45 percent in Auckland , alongside the rising cost of purchasing those rentals, there is a reasonably logical reason why median rents have actually risen .Furthermore it truly shows that when Auckland house prices start to fall those savvy investors, without sustainable yields will be looking to offload all at the same time . Sounding more like Dublin every day.

Not exactly like Dublin, Dublin built a lot during its property boom so after the correction it was a town with low rental costs and was able to maintain that competitive edge over neighbouring towns.

Auckland's property boom is mostly notable for its lack of building, so after the next correction Auckland will non-competitive with other regional cities all of which are building faster.

However, it's a different story in Christchurch, where weekly rents have fallen 9.1% over the year.

I believe this deflation is skewed towards the larger houses or less desirable areas. I'm looking for a 2 bedroom rental and don't see any significant change. A lot of couples are flatting with strangers and demand smaller dwellings to escape that situation. There is a lack of quality small dwellings not aimed at retirees. Then you've got the damaged eastern suburbs nobody wants to live in.

Just checked TradeMe - lists 753 one and two bedroom rentals in Christchurch. If you check the breakdown larger homes have dropped 13.8%, while one and two bedroom only 7.9%. The broken homes in the east I thought were "bargains" for investors a few months ago.....

The irony for me as a landlord is that bringing my houses up to full insulation is a cost I will pass on to my tenants while the house I live in has no insulation either.
If your house is cold you where more clothes. My kids grew up, went to university, are productive citizens and all without insulation. Go Figure.
Making laws for house standards takes away the tenants choice to pay a cheaper rent for a cheaper house.

I'd rather not have insulation. Too stuffy, and pointless when I'm keeping windows open year-round and hate having a heater in the bedroom.

I am constantly amazed how the hippy generation sold out. The enlightening wasn't quite enough, they all joined the greedy rentier class and are at the heart of sucking the country dry with their unearned income. You say productive? Only about 1:20 people in this country actually produce something.

Years and years ago I had a landlord who was the epitome of that. Would come round and try to weasel out of washing machine repairs, or screw me over in something equally trivial, all whilst wearing a Che Guevara t-shirt. Irony.

A lot of the hippy generation never sold out as they were always greedy. I am of that generation but wasn't a hippy, more mainstream but I knew a lot of the so- called hippies and still do. Most of them came from extremely privileged backgrounds (not me). How do you think they Cld afford to spend most of their 20's and 30's setting up and living in communes when there was no government unemployment benefits in those days. What are they doing today, owning rentals and "cruising" the world. Hippies be damned. As for the enlightenment, just an excuse to get stoned more like it, nowadays they don't need an excuse.

Yeah, fair critique guys; I took my family bush, back in the late 80's recession and rented the house out, to dodge getting mortgageed.
28yrs latter still in the bush, self sufficient, no power bills, no water bills, recycle the poo's and wee's, so yeah, we all have our stories and now I'm wealthy if being happy with what you've got is the measurement.

That's a broad brush you tar people with.

Me too, I live in a freezing 70's house. Unless it's tax deductible or depreciable I just cant see any logical reason why a landlord would install new insulation. Might as well throw money out the window.

So more tax payer dollars going to prop up rental prices; increased tax break for lords of the land because their costs have gone up. Renters who can't presently buy have savings cut into and if they're not saving their net income is reduced - shafting the local economy.

Which set of forward thinking geniuses came up with this scenario, waved their collective willies and said let it be so?

Zeds are Us .....great comment !
When will landlords realise the taxpayer (whether a renter or not) is not just a "cash cow.....as far as Im concerned why should my tax dollars be pumped into the landlords pocket .......and ultimately the banks ....but that ones another story......

Expect a few more listings from the tight arse landlords that refuse to spend a cent on bringing property up to standard.

Decent landlords make sure insulated and a heat pump a least ,not a big cost of get five years interest free at hardly normal. Adds value and improves health a win /win.

Re, people sleeping in cars, I think the drink /drive message finally getting thru.lol

Liars, dam liars, and statisticians. Firstly lets re work Otago after you take out central Otago.
Secondly Trade me needs to show the numbers that get advertised and compare that with the existing stock. (number of private rentals in each area). They have the addresses of the properties so why not show increases in asking rent based on actual repeated advertising of the same property.
Third they would not have the foggiest idea of what the existing rents are for long term enduring tenancies. MBIE who publish rents from lodged bonds have the same problem.

Trade me are an advertising company. Why would they publish their own numbers of advertisements compared to existing housing stock?
They produce nothing.

i have also published adverts compared to stock and regularly update it eg http://listings.jonette.co.nz/blog/investing-in-ak-or-hn-now.html

They have also never published inventory, possible because it relates to their income. But I have for a few years now @ listings.jonette.co.nz
Stock, listing or inventory, is a good indicator of supply, probably better than price, which looks overcooked in AK

Interesting about the overall rental decreases in Christchurch. In certain sectors I know for a fact that rents have gone up in the last year. That is to say nicely renovated smaller dwellings in some popular under-supplied areas. Yet long-term landlord favourite areas like Burnside have been quite weak for the past year, especially the older, bigger dwellings with definite over-supply that will result in disillusioned landlords selling out.

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