National median rent hit $400 a week for the first time in February

Property

Rents rising strongly in Auckland, Tauranga, Porirua and Queenstown, falling in Christchurch and Kapiti

9th Mar 17, 7:58am by Greg Ninness

By Greg Ninness

The national median rent for newly tenanted properties hit $400 a week for the first time in February, according to data compiled by interest.co.nz from tenancy bonds collected by Tenancy Services.

That was an increase of $20 a week (5.3%) compared to February last year.

Of the 20 areas around the country where monthly rental figures are tracked by interest.co.nz, the biggest increases over the the last 12 months were in Queenstown Lakes and Tauranga, where the median rents in February were up $45 a week compared to a year earlier.

In Tauranga the median rent in February was $440 a week, up from $395 in February last year (+11.4%), and in Queenstown Lakes it was $525 a week compared to $480 a year earlier (+9.4%).

The median rent in Rotorua was also up significantly, rising from $280 in February last year to $320 in February this year (+14.3%).

In Auckland, where there is a growing housing shortage due to the region's strong migration-fuelled population growth and insufficient supply of new homes coming on-stream, the annual increases in median rents ranged from $15 a week in the central Auckland suburbs (within the old boundaries of the former Auckland City council) to $42 a week in Rodney.

The area with the highest median rent is Auckland's North Shore, where February's median rent was $550 a week, up $28 (5.4%) compared to February last year.

Some of the biggest increases over the last 12 months have occurred in places that have some of the highest proportions of people on low incomes, such as Manukau and Franklin in South Auckland and Porirua in Wellington, where the median rents have increased by $30 a week between February 2016 and February 2017.

Only three of the 20 areas tracked by interest.co.nz posted declines in median rents over the 12 month period, Whakatane -$10 a week, Kapiti -$20 and Christchurch -$10.

The median rent in Christchurch was $390 a week in February, down $30 a week (-7.1%) since it peaked at $420 a week in February 2015.

The table below shows the movement in median rents in the month of February since February 2014 in all 20 areas tracked by interest.co.nz.

Median rents in the month of February 2014 - 2017
	Feb-14	Feb-15	Feb-16	Feb-17
Rodney	405	430	475	517
North Shore	490	500	522	550
Waitakere	405	437	450	475
Central Auckland	430	450	485	500
Manukau	415	450	460	490
Papakura	390	390	440	460
Franklin	380	390	400	430

Hamilton	322	340	350	370
Tauranga	345	362	395	440
Rotorua	250	265	280	320
Whakatane	275	300	330	320

Kapiti	350	350	370	350
Porirua	340	370	385	415
Upper Hutt	300	290	300	317
Lower Hutt	340	300	340	355
Wellington City	435	430	450	475

Christchurch	400	420	400	390
Timaru	270	280	290	310
Queenstown-Lakes	380	420	480	525
Dunedin	295	300	310	320
All NZ	350	365	380	400
Source:Tenancy Services

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51 Comments

by sharetrader | 9th Mar 17, 8:13am 1489000415

yet wages are not rising at the same rate, so those renting will have to forgo consumer spending to afford the roof.
also if a lot of the roofs supplied are with borrowed funds, a lot more will flow offshore.
then what, will the state have to step in with more funding? from where? more taxes? less services?
this is like the train heading towards the bridge that is out, we can see what is going to happen and we are waiting for the people in charge to arrange a fix but they are having a long smoko break instead

by Kakapo | 9th Mar 17, 8:24am 1489001081

Real businesses trying to sell other goods and services must be getting pissed off with this. All this income that could be spread through the economy being bogarted by landlords.

by Noncents | 9th Mar 17, 8:35am 1489001739

That's just the difference between a Need and a Want. People need shelter, they don't need a paid of $400 headphones.

by Conrad | 9th Mar 17, 8:46am 1489002363

But the folks working in the retail stores need someone to buy them.

All we need now is a big rise in interest rates to really crush consumer demand and herald the new age of personal austerity!

by Noncents | 9th Mar 17, 8:59am 1489003190

That's kind of where the current financial system is failing.

Its a giant loop, but money is leaking out of the loop and no more is being put in.

The renters need more money to buy the headphones- but they need people to buy the headphones to get them more money. But the thing is "they" (the low level staff) don't get the extra money. It heads off into the pockets of the top dude.

So they are effectively stuck, which is exactly what we are seeing around the country and the world at the moment.

by Advisor | 9th Mar 17, 10:52am 1489009942

This is just the financial system faltering. Trust me, we haven't seen the financial system fail yet.
The US economy just added a record number of jobs which means the Fed will most certainly raise the interest rate next week by another 25bp. All thanks to an ultra-liberal economic system, non-New Zealanders own nearly 28% of our national wealth.
http://www.msn.com/en-nz/money/news/foreign-ownership-nears-50percent/a…
We are already losing our credibility in most areas as a result of which investors are pulling out; something evident in the falling NZD due to a narrowing interest rate arbitrage against the dollar, plunging dairy prices and having investment analysts say that our businesses have hit a glass ceiling.

by JB | 9th Mar 17, 2:15pm 1489022112

The reason non New Zealanders own 28% of our assets is simply the fact we have invested more than we have saved for 46 consecutive years under many governments and have sold assets and borrowed to fund this habit - still running at $ 8 billion per annum.

Don 't bitch about foreign ownership while driving your imported vehicle or talking on your mobile or heading off to Phuket.

All the predictable outcome from an overvalued exchange rate which should adjust to deliver a current account surplus over time in a developed economy.

Fudamental change - a currency board Singapore style is my solution to what is an intractable problem.

I think 46 years is time sufficient to deduce we have a problem !

by RickStrauss | 9th Mar 17, 9:52am 1489006340

The girlfriend and I sit firmly in the high income bracket, but we're already on the austerity path. Have been for quite a long while. The spending certainly isn't coming from us.

by Roelof | 9th Mar 17, 8:55am 1489002953

Bogarted.?? ( selfishly appropriate )

jeezz.. You are sounding a bit like a comrade...
those selfish capitalist pigs...... those ducking bogarters.... parasite landlords

by Wildcard | 9th Mar 17, 9:33am 1489005198

Edit.

by Roelof | 9th Mar 17, 9:20am 1489004408

not sure if the word "bogarted" expresses the nature of rent increases.... or concern
I had to look the word up..

Maybe I should have added a smiley face... I was being tongue in cheek.
Unget it... :)

by Wildcard | 9th Mar 17, 9:34am 1489005273

Oops, my bad! Sorry :) We really need sarcasm quote marks on the Internet.

by RickStrauss | 9th Mar 17, 9:53am 1489006380

Now you two hug.

by Kakapo | 9th Mar 17, 12:23pm 1489015383

So commie of me, advocating for people to be able to spend their money on a variety of products and services of their choice, rather than have it captured by one sector through their influence on government..

Is everybody in here very, very stoned?

If it's tongue-in-cheek, then good Poe.

by Brock Landers | 9th Mar 17, 8:25am 1489001139

Braindead Bill English says it's a sign of success and a good problem to have.

by RickStrauss | 9th Mar 17, 9:53am 1489006425

I think on Planet English all problems are good problems to have. Perhaps it's part of his Roman Catholic proclivity for embracing suffering and thanking the Lord for it?

by Plutocracy | 9th Mar 17, 10:37am 1489009062

Why worry when the 'sky fairy' will save you?!

by Advisor | 9th Mar 17, 10:56am 1489010184

What English means is- "The government is hopeless, the people are helpless and more people will soon be jobless". Since nothing can be done about it, sit back and wait for your doom with open arms.

by Kakapo | 9th Mar 17, 12:25pm 1489015527

By saying this is a good problem, Dopey is probably pleading for the public to believe whatever he says like a bunch of simps, so he can make his getaway ahead of the angry mobs when it all blows.

by Yvil | 9th Mar 17, 2:58pm 1489024700

Read David's article entitled "backwards or forwards" in direct response to your commenthttp://www.interest.co.nz/news/86422/we-check-claim-wages-are-not-risin…

by jfree | 9th Mar 17, 8:40am 1489002049

This is a good problem to have! - Bill (John)

by tothepoint - d… | 9th Mar 17, 10:54am 1489010073

In my view, there are a number of countries (including NZ) that didn't learn much from the global financial crisis (GFC) of just a few years back.

Clearly, the forces are building again - including soaring debt levels and far too much speculative investment in property, etc.

I believe there will be another shake-out before too much longer. But it might well be very much larger than 2008.......

by Roelof | 9th Mar 17, 9:15am 1489004128

I agree.... though I think it may be 8-10 yrs away...
I'm guessing NZ can get thru another recession and then the next business cycle may culminate in our own version of a GFC..??
If u look at the debt burden in NZ it is less now than it was back in 2008. ( By debt burden, I mean the ability to service debt , which is a function of both income and interest rates )
http://www.rbnz.govt.nz/statistics/key-graphs/key-graph-household-debt

AND... u are right ....NZ has learnt very little from the GFC... ( thou , the RBNZ now have their eyes on levels of credit growth ).
We still believe in "debt Capitalism".... ie. economic growth thur high levels of credit growth.

by Zombie ponzi | 9th Mar 17, 9:58am 1489006728

At least some of the major economies (US and UK) went through a private debt deleveraging, even if at expense of more public debt.

Whereas New Zealand and Australia have seen continued increases in private debt to record levels.

I think this means that while the US powers on for a few more years and increases interest rates, New Zealand and Australia could be absolutely stuffed with record levels of private debt exposed to offshore rates.

In some ways we are a decade behind in the cycle and haven't had our GFC yet.

by Roelof | 9th Mar 17, 10:07am 1489007266

In some ways we are a decade behind in the cycle and haven't had our GFC yet.

I totally agree with that... which makes it even more tragic that we have not learnt from those that have gone before..

by steven | 9th Mar 17, 10:16am 1489007777

I am not sure what the lesson is you think there is, or what we have not learned? please clarify?

by Roelof | 9th Mar 17, 12:09pm 1489014586

That generating GDP growth thru excessive credit growth is a two edged sword.
The purchasing power that is created from credit growth results in a distorted transmission of information.
Out of this comes a long term debt cycle.. ie. there is a point where we have to deleverage or "reset".

Because NZ is one cycle behind the big countries, it was not to hard to anticipate the effect of really low interest rates in NZ...
You have been commenting here as long as I.... and we have had different views..
What have you learnt..??

by Zachary Smith | 9th Mar 17, 8:56am 1489003015

People have a go at Landlords if rents go up at the same time as having a go at Landlords if rents are stagnant. And in Gordon's case have a go at Landlords if rents go down.

by Double-GZ | 9th Mar 17, 10:13am 1489007613

It's all about location not so much the house itself. I am charging $600/week for a 2-beddy in the Bays :-)

by Zachary Smith | 9th Mar 17, 10:20am 1489008015

I've been thinking a lot about location and how it is such a primary consideration for your own home and a rental. For a rental it means you will get more rent and a better choice of tenant. It also provides a bulwark against property price downturn as well as a competitive edge in the case of a shortage of tenants. The downside is that it costs more in the first place.

by Dezo | 10th Mar 17, 6:17am 1489079874

I need to put my rent up :-)

by head_down_bum_up | 9th Mar 17, 10:54am 1489010099

Spoken like a true landlord.

Who has a go at Landlords when rent stays flat or goes down? Surely not tenants...and they are the ones that face the full impact of this.

by Zachary Smith | 9th Mar 17, 11:07am 1489010842

Landlords face impacts too. People on this site often criticize landlordism in Auckland as being an irrational business model due to rents not keeping up with house inflation.

by RickStrauss | 9th Mar 17, 11:32am 1489012357

It's perfectly rational when you're expecting immigration and foreign purchases to keep pushing prices up to new heights, i.e. investment for capital gains.

by THE MAN 2 | 9th Mar 17, 9:07am 1489003626

Christchurch median rent $390 per week?
Not too sure how accurate this is?
These figures are taken from the bonds?
There must be a lot of people who are propping up their rental properties around NZ going by the figures here?
If this is true I am not sure how and why people would be calling landlords greedy or parasitic?????
We have only got 10 per cent of our rental properties under the so called median of $390 in Christchurch so a bit hard to fathom really!!!!

by mfd | 9th Mar 17, 12:32pm 1489015928

I'm sure we've been over this before - your portfolio is not necessarily representative of the whole market, particularly as you always claim to have above average houses.

The important thing is the methodology is consistent so it provides good information about trends, confirming that rents in Chch are still falling as a whole. Remember that what we're discussing here is data, which overrides your own personal anecdotes.

by THE MAN 2 | 9th Mar 17, 2:20pm 1489022402

Mfd, when have I ever said that I have above average houses????
We have well maintained and good value for money homes, well bought and providing good returns but certainly wouldn't be renting most of them out for as little as $390 per week.

What I do think,is that there must be a helluva lot of people who,are inderrenting their property and are prepared to take a rental loss annually on them, by propping them up.
If your property is giving you a negative return, then I don't beleive it is worth having to be honest!
Investments in my line of thinking should be positively geared or why bother?

by mfd | 9th Mar 17, 3:13pm 1489025593

If they're well maintained then they'll be above average in Chch, I've seen some pretty nasty places around here. I quite agree that I like my investments to be cash flow positive, but I can't make everyone else think the same. Perhaps some overestimated how much rent they could collect, or had to reduce rent to meet the falling market. I guess this is just a risk of investing in an over-supplied market, you can't always get what you want.

by Cowpat | 9th Mar 17, 9:27am 1489004832

According to the numbers , rents for a 3 bed Christchurch property are trending down and are 5.8 percent lower than 2014. Also in context, median rent for a 3 bed Auckland property, those being the most common, are up 14 percent, about 2 percent annualised over the past 5 years. Yes rents are rising , but to obscurely suggest that they have risen in line with house prices or rapidly , and in particular Auckland is nonsensical. Using lower quartile pricing for a 3 bed home in Auckland over the same time frame, should be sending red flags everywhere. Interest rates are now rising and Auckland prices are falling , on those numbers some landlords are paying the tenant.

by THE MAN 2 | 9th Mar 17, 9:42am 1489005746

If the rental return for central Auckland is only 500 per week then the returns are quite pathetic when you also factor in the rates, insurance, BC fees etc.
Wouldn't be bothered investing in Auckland and you can see why young people want to rent rather than buy, and they tend to be pretty transient anyway.

by Roelof | 9th Mar 17, 9:58am 1489006710

i agree... and just to give some perspective :

$100,000 on term deposit at 3% = $3000/yr ..... tax at 30% = $2100 net.

Money loses value...so lets allow 2% for depreciation = $2000

So... Real NET income = $100/ yr..... which is a 0.1 % return on investment.

Not hard to see why people choose to store their wealth in an asset that, ...well... is a store of value.

( CPI is about 1.3 % ... M3 money growth is 7%....SO... the true depreciation rate of money is somewhere between the two figures )

As you can see , there is a Tax disincentive to invest in savings .....
AND.... do you think the IRD or Gareth Morgan will ever promote a depreciation allowance for savers... NEVER..

by Zachary Smith | 9th Mar 17, 10:34am 1489008863

I chose to buy a rental that at first looks like a bad investment. I paid 620K and borrowed the full amount. It costs me on average about $150 a week. However if house prices keep up with inflation of around 2% I will get a small return. But the decision is often not just a financial one. I intend to live in the house when I downsize after the kids have left home so I have locked in the price now. If you have two good incomes coming in from salary $150 a week is quite small money especially if 2% gain per year is $240 a week. House price inflation is likely to be much greater. Already its value has gone up $130K after two years which is $1250 a week. There is also the possibility that my kids will live there at some stage too so there are more factors in play than just pure business.

by sammnz | 9th Mar 17, 11:34am 1489012460

fundamentally it is business, as you said the price of your rental has gone up. you would not have bought it if you thought there was risk in it going down. when you downsize to it you will bank the money you make from your other house, and/or reinvest it into the property or give one to your children. it is business at the end of the day, and unfortunately this logic is only fueling the fire and is one of many contributing factors into the "crisis" that we have on hand.

by Zachary Smith | 9th Mar 17, 1:31pm 1489019502

you would not have bought it if you thought there was risk in it going down

Actually I very much thought there was a risk of it going down at least in the short term of less than five years. I used to be one of those who said that there was no reason for prices to go up because..fundamentals. I even rented for a couple of years just after 2000 because of my belief that house prices would remain fairly static.

by Nimbo | 10th Mar 17, 10:06am 1489093586

Fundamentals - LOL.

by Small Kev | 9th Mar 17, 12:12pm 1489014750

I see amazing amount of young people from Europe coming here to work and hoping to stay long term. Most of them are renting houses together, each pay $180pw per room. I asked them why come here, they all say it's too crowed where they come from...

by Nimbo | 10th Mar 17, 10:08am 1489093681

Young people from Europe make great tenants.

by Boatman | 9th Mar 17, 12:48pm 1489016923

This rent increase may or may not be an unintended consequence of our immigration policy , but we cannot say it was an unforseen consequence

70,000 new arrivals in New Zealand year to date .................... what did we expect would happen to the demand for housing ?

Any informed , rational thinking human being would have seen these rent increases coming .

by RickStrauss | 9th Mar 17, 3:21pm 1489026105

If Roy Morgan political polls tell us anything, it's that there are many people who are not informed.

by Queen | 9th Mar 17, 3:45pm 1489027505

it's a product of success the same politicians/party keeps getting elected.

by Carlos67 | 9th Mar 17, 5:29pm 1489033747

Landlords simply moving ahead of rising property purchase cost and also rising interest rates on the horizon. Its a no brainer really, shelter is only a couple of notches below food, water and air its a must have. That overseas holiday, a new car, new cellphone every year and all those toys and a latte everyday and even kids is not a must have, they are wants.

Rents rising strongly in Auckland, Tauranga, Porirua and Queenstown, falling in Christchurch and Kapiti

Median rents in the month of February 2014 - 2017

51 Comments