Average Auckland rents rose 3.28% last year says Barfoot & Thompson

Property

Barfoot and Thompson says the rate of residential rent increases in Auckland declined steadily throughout 2018

21st Jan 19, 1:48pm by Greg Ninness

The average rent for Auckland rental properties managed by Barfoot & Thompson increased by 3.28% last year.

Barfoot & Thompson is the largest real estate agency in Auckland and manages more than 16,500 residential rental properties in the region on behalf of landlords.

The figures show that although rents are still going up, the rate at which they are increasing is declining.

"Rent increases trended down for most property sizes and areas throughout 2018, and this persisted in the final months of the year with the lowest rate of change yet," Barfoot and Thompson Director Kiri Barfoot said.

The average rent for all types of rentals managed by Barfoot was $567 a week in the fourth quarter of last year, up 3.28% compared to the same quarter of 2017.

For three bedroom homes the average rent in the fourth quarter of last year was $564 a week, up just 3.1% compared to Q4 2017.

Although the rate of increase is relatively modest in percentage terms, a family renting an average three bedroom home was likely to be paying $17 more in rent at the end of last year than they were at the end of 2017.

However in the central city , the average rent was up 7.24%, which Kiri Barfoot said was mainly due to the number of large, luxury apartments being rented.

Across the rest of the Auckland region average rents rose by between 2.2% in Rodney, to 4.45% in Franklin.

Kiri Barfoot said rents were increasing by around 4% a year throughout 2017 but that rate of increase declined steadily throughout 2018.

That may be good news for tenants, but landlords won't be celebrating.

"While rents are still going up, it is unlikely the current rates of increase are keeping pace with landlords' rising operating and compliance costs, nor are we seeing the same level of capital gains which were appeasing many landlords' calculations. Eventually something will have to give," Kiri Barfoot said.

Average Weekly Rent of Properties Managed by Barfoot & Thompson

Q4 2017 compared to Q4 2018

	No Bedrooms						% change Q4 2017 v Q4 2018
	1	2	3	4	5+	Total	% change Q4 2017 v Q4 2018
Central Auckland	$409	$582	$1,108			$507	7.24%
Central Suburbs	$380	$506	$643	$812	$1,051	$611	3.44%
Eastern Suburbs	$385	$518	$674	$905	$1,081	$653	3.19%
Franklin/Manukau Rural	$312	$371	$451	$562	$650	$475	4.45%
North Shore	$401	$484	$600	$743	$906	$620	3.83%
Pakuranga/Howick	$346	$458	$562	$680	$804	$596	2.91%
Rodney	$355	$442	$539	$664	$811	$559	2.20%
South Auckland	$310	$414	$502	$604	$728	$502	3.86%
West Auckland	$330	$431	$517	$624	$751	$520	3.57%
Auckland	$372	$475	$564	$698	$860	$567	3.28%
% change Q217 v Q218	1.91%	4.34%	3.12%	1.70%	1.47%	3.28%

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

54 Comments

by Voiceofreason | 21st Jan 19, 2:17pm 1548033452

With continued news of NZ among the very top most unaffordable markets in the world in relation to income, including Tauranga being the 8th most unaffordable in the world (!), movement of rents is kind of irrelevant. It’s a speculative bubble and when that ends, the market will change dramatically.
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…

by Lapun | 21st Jan 19, 2:31pm 1548034306

So you really don't believe we are the world leader and all small towns throughout Europe, America and Asia will copy us and have massive property value increases?

by Voiceofreason | 21st Jan 19, 2:58pm 1548035891

I assume you’re joking, but many people saying things like that at the moment do believe NZ is so different and special that these prices are justified. Same thing was said about Sydney and Melbourne, and everywhere else that has had a bubble.

by Lapun | 21st Jan 19, 3:39pm 1548038397

Well Auckland is a special place. Nowhere combines such a pleasant place to put a city with such consistently poor council which is then hindered by ill-considered govt interventions. Tauranga is about the same population as Dunedin or Cairns or Springfield Illinois. What is special about Tauranga?

by Fritz | 21st Jan 19, 3:54pm 1548039269

Well it's got a nice climate and a few nice beaches which has to count for something.
But I'd rather live in Dunedin. For me Tauranga is such a bland, boring place.

by Lapun | 21st Jan 19, 3:48pm 1548038936

Google has the average price of a property in Fargo North Dakota as 365000 NZ$ or under 2,600NZ$ per square metre. Is that a fair comparison with Tauranga?

by Carlos67 | 21st Jan 19, 2:35pm 1548034504

The income figures in Tauranga distort the affordability numbers so its plain wrong. A 700K house down there will cost you $1M in Auckland so Tauranga is still way cheaper, the problem would be getting a decent job to pay the mortgage if you still need one. This is not a problem if you bailing out of Auckland and you own the home as you end up with $300K plus in the bank and you can live on your super and interest with ease.

by Voiceofreason | 21st Jan 19, 3:14pm 1548036891

Indeed, if you don't mind losing 20-30% or more of that house value when the bubble bursts. Still, gotta live somewhere. It's less than losing the same percentage in Auckland, if you're retired and don't have to worry about the job market.

by fat pat | 21st Jan 19, 10:58pm 1548064692

A 700K house in Tauranga with a view of the ocean and nice garden will probably cost you at least 2 million in Auckland, or 4+ million if it's on the north shore. That's what's so ridiculous about this "Tauranga beat down", the upper quartile in Auckland is so insanely skewed upwards that medians don't convey the full picture. You only have to look at the north shore on homes.co.nz to see how overpriced and entirely unaffordable whole streets and suburbs in Auckland have become.

by bilbo | 21st Jan 19, 2:47pm 1548035227

I'm pretty sure CHCH is about -2% pa judging by my own experience. I was paying $480 for 3 years, moved out the place was vacant for a few weeks until they dropped the rent to $450.

But I'm no expert so I'll let the boy explain it. Eh, it was probably just the bad summer weather or people away on November holidays or oscillation or something like that.

Happy days.

by Nzdan | 21st Jan 19, 3:01pm 1548036063

The last place we rented in Belfast before we bought our own place was $415 per week. They offered us $425 to stay on which we declined. I had a look a month later and it was advertised for $375. The owner ended up selling in the end. This was late 2016.

by Boatman | 21st Jan 19, 2:52pm 1548035533

I dont believe these numbers.

While I don't have any empirical evidence to support my view , I have more than enough anecdotal evidence of rents going up way ahead of inflation , including , but not limited to that of my eldest daughter who has seen a 15% rise in rents in 3 years .

And I also dont believe the nonsense, spin and press releases put out by any Real Estate companies , which are driven 100% by commercial imperatives .

by Fritz | 21st Jan 19, 3:21pm 1548037307

We recently (ie. one week ago) moved rental property in the eastern suburbs, after two years in the previous place.
I don't know about the last 12 months, but when we were looking for a new place rents seemed about 7-8% higher than they were two years ago.

Having said that, while mid range properties seem a lot pricier in terms of rents, lower end and high end rental properties seem to sit on the market, so maybe rises in the mid range are offset by flatness in the low and high ends?

by lonewolfnz | 21st Jan 19, 3:59pm 1548039577

Many land-lords only increase rent (or increase rent more) when there is a change of tenancies, especially if you have good tenants. Therefore many tenants may have a big shock when they move, and equally many tenants in periodic tenancies may be (wisely) choosing to stay put. The big test will come when the healthy homes bill progresses and we actually find out what the required standards are. An extreme approach (heatpump in every bedroom) plus no restrictions on pets for example would lead to even those land-lords hiking rents considerably.

by Ocelot | 21st Jan 19, 3:59pm 1548039582

Wouldn't Barfoots have motivation to pump the numbers rather than deflate them?

by Stealth | 21st Jan 19, 4:23pm 1548041011

Rents in Auckland will only go up over time so be warned....landlords will want more rent now house prices have slighly eased to get a better return.

by PropertyPrices2Fall | 21st Jan 19, 4:29pm 1548041358

Whatever you are smoking, just continue, you'll remain in God zone

by BuyLowSellHigh | 21st Jan 19, 5:22pm 1548044526

Are you predicting that Auckland rent will go down?

by PropertyPrices2Fall | 21st Jan 19, 6:32pm 1548048758

Definitely, at least in west Auckland. .

Noticing a slight dip already. .

by Voiceofreason | 21st Jan 19, 6:49pm 1548049796

Watch what happens in Sydney and Melbourne with rents (already going down) and expect the Auckland market to follow. So far people are in denial about the NZ market following Australia down. Similar bubbles.

by BuyLowSellHigh | 21st Jan 19, 7:41pm 1548052911

You would get on well with Retired-Poppy. Auckland is Sydney is Beijing is Nairobi is the South Pole!

by Voiceofreason | 21st Jan 19, 8:14pm 1548054892

Sydney and Mekbourne and Auckland have similar sized bubbles. People are in denial about these close markets being much different.

by BuyLowSellHigh | 21st Jan 19, 9:18pm 1548058719

Because reasons ay

by Voiceofreason | 21st Jan 19, 11:49pm 1548067750

I'm sorry but if you think that Tauranga and Auckland are going to remain in the top 10 most unaffordable markets in the whole world (and think of all the lovely places to choose from) without a significant correction, I don't think I can say anything to convince you otherwise..
http://digitalfinanceanalytics.com/blog/australian-property-still-sever…

by Fritz | 21st Jan 19, 4:31pm 1548041496

I think a similar thing is happening with rentals as homes for sale. Crap places are not moving, or are only moving when the ambitious asking rents are reduced.There's only so much you can ask for garbage, of which there is plenty. And high end places are also not shifting. People can't afford them or those that can, own

by BigDaddy | 21st Jan 19, 4:38pm 1548041886

Barfoot's numbers do not make any sense if you believe we are in the midst of a"Housing Crisis".
If there is really such a crisis and a shortage of affordable homes, you would think that rents would be sky rocketing. The fact that they are only increasing by a small margin over inflation means that there is less pressure on the market from the homeless and FHB's than we have been led to believe.
Granny Herald ran a story a few days ago about the squeeze on the rental market, but yet again it appears that the Herald's reporter was interviewing their typewriter.

https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12192006

There is no Housing Crisis. It is an Affordability Crisis. There are plenty of houses for all to buy, but renting is cheaper and easier.

by Fritz | 21st Jan 19, 4:55pm 1548042959

The supply / demand imbalance exists, but is exaggerated. Occupancies are higher. A lot of South Asian immigrants homestay with relatives or acquaintances. So many young people like my 20 year old son and most of his mates stay at home.

by BuyLowSellHigh | 21st Jan 19, 5:24pm 1548044661

But you’d acknowledge that demand for rentals exceeds supply, hence the increase in rents? More than just a small margin over inflation. Inflation is 1.9% and B&T rents have risen 3.28%. That’s something like 70% higher, Wolly Noland.

by PropertyPrices2Fall | 21st Jan 19, 5:23pm 1548044630

Welcome back buddy. .

Looks like you haven't left your bad vises behind. ..

Check trademe to see how many properties are Available NOW. . Try to validate that with your statement

by nymad | 21st Jan 19, 5:28pm 1548044906

It's always an interesting Marshallian cross when demand exceeds supply and there is a consumer surplus.

by Voiceofreason | 21st Jan 19, 6:55pm 1548050155

BLSH, I’m wondering how long it will take you to realise that this is a bubble and there’s not really a shortage (of affordable places, yes). If you stick to your namesake, when John Key sold his place in Parnell was the “Sell High” stage. Really doubt it’ll go any higher before the bubble bursts. It might already have started...

by BuyLowSellHigh | 21st Jan 19, 7:51pm 1548053498

Regarding your comment about a shortage of affordable places - There is a shortage of cheap everything. Demand for $100 Ferraris, 10c avos and $200,000 houses massively exceeds supply. In economic terms, as soon as there is a shortage, prices go up until demand (number of people willing and able to buy) equals supply. If you’re talking number of houses to head of population that’s a different story - MBIE says there is a shortage in this sense and I believe them.

Just because property is expensive does not mean it is a bubble. On what data do base your belief that Auckland housing is a bubble? Average yield is 4% and rising, which isn’t terrible.

My username is just a username, I made it when I was dabbling in shares, I’ve never sold a property.

by Voiceofreason | 21st Jan 19, 8:16pm 1548055012

BLSH, It’s based on NZ being one of the most unaffordable places in the world, based on price to income, along with Australia, Canada, and Hong Kong. That’s kind of all the data that’s needed and it’s not sustainable. Sydney and Melbourne are similar to Auckland, but as we know the bubble is bursting there (currently over 10% down in Sydney and accelerating), and it looks like it is in Canada as well. Bit harder to tell in China as the figures are a bit opaque. I don’t think we have a shortage of housing. We have a shortage of affordable housing, which is quite different. We can’t manage to build properly affordable housing at the moment, as land and building costs are so expensive.

by BuyLowSellHigh | 21st Jan 19, 9:10pm 1548058200

London, LA, Hong Kong, Toronto, San Fran, Sydney, Vancouver. All bubbles you think? It is just pure coincidence that they are all highly desirable hubs in first world countries. You’re basically saying that they are bubbles based on nothing more than the fact that they are unaffordable. Just because something is expensive doesn’t mean it is overpriced. And I agree that there is a shortage of cheap houses, just as I acknowledge that there is a shortage of $100 Ferraris.

by Voiceofreason | 21st Jan 19, 10:30pm 1548063053

"It is just pure coincidence that they are all highly desirable hubs in first world countries."
They are desirable but that doesn't justify getting so out of whack to historical norms of income to price. It's also no coincidence that most of them got through the GFC relatively unscathed due to artificially keeping them pumped up, delaying the decline, not avoiding it. I was in Sydney after the GFC and the govt doubled the First Home Owners Grant (tripled for new builds), along with other measures. That's when the prices started to really take off rather than falling.

by bw | 21st Jan 19, 4:45pm 1548042325

Phil Rudd's place hasn't moved on yet, and that at a ~30% discount to RV ( not that RV means that much, but just sayin'..) and 131,000 views!

"Rateable value (RV): $5,780,000
Price: Asking price $4,100,000"

https://www.trademe.co.nz/Browse/Listing.aspx?id=1834819451

by Taubin | 23rd Jan 19, 6:15am 1548177323

The floating tyre in the harbour is what really sells it for me. If only I had 4.1mil laying around I'd buy it for the tyre alone.

https://trademe.tmcdn.co.nz/photoserver/plus/908185743.jpg

by Nzdan | 23rd Jan 19, 7:02am 1548180162

“Sporting its very own Loch Ness Monster”

by K.W. | 21st Jan 19, 6:30pm 1548048634

Might pay to check what is happening in Sydney. Rents are now falling, and the vacancy rate has sky has rocketed in the last few months. Word over there is that cashflow problems at home in China has meant all those ghost houses are being put on the rental market as the owners cant afford to carry them any more. It will be interesting to track the Auckland vacancy rate from here on in.

by Fritz | 21st Jan 19, 6:29pm 1548048569

A lot of places on Trademe in the eastern suburbs listed late last year or early this year have not been rented.
Doesn't scream of a major problem.

by PropertyPrices2Fall | 21st Jan 19, 6:35pm 1548048922

That's exactly the question I posed to BHSL

by BuyLowSellHigh | 21st Jan 19, 6:46pm 1548049565

How many rentals are listed in Hong Kong? Lots. Does that mean Hong Kong has a surplus of housing? No. You need to think of listings in relation to Auckland’s population. And an increase in listings relitave to population likely only represents a reduction in the deficit of rentals, not a surplus. If supply of rental properties exceeded demand prices would be falling, not rising faster than inflation.

by Fritz | 21st Jan 19, 6:52pm 1548049935

I never implied there isn't a supply issue. As I have said elsewhere there is. It's just I don't think it's anywhere as pronounced as the conventional wisdom suggests. And the rent increases support that argument, being significant but still fairly minor.
If it is really as desperate as some suggest then then shouldn't be lots of properties sitting around for 3-4 weeks or more.

by BuyLowSellHigh | 21st Jan 19, 7:12pm 1548051128

My comment was more directed at PP2F’s earlier comment about the number of listings on trademe.

by PropertyPrices2Fall | 21st Jan 19, 8:45pm 1548056742

You still didn't answer my question about the number of properties that are available NOW... Shortage??? They are lying vacant and there is no stampede to get them

by BuyLowSellHigh | 21st Jan 19, 9:10pm 1548058254

How many are available now?

by PropertyPrices2Fall | 21st Jan 19, 9:15pm 1548058511

Weird you should ask that question.. in short you lament with no knowledge of what you write.. sad..

by BuyLowSellHigh | 21st Jan 19, 9:17pm 1548058663

You don’t know how many are available now?

by PropertyPrices2Fall | 21st Jan 19, 9:18pm 1548058731

You made the proclamation of the shortage, so do your research..

by BuyLowSellHigh | 21st Jan 19, 9:29pm 1548059348

You made the proclamation that lots are “available now”, but can[‘t] tell me how many are “available now”. Also, please explain to me why rents are rising in Auckland if there is a surplus.

by PropertyPrices2Fall | 21st Jan 19, 9:22pm 1548058930

As usual you prove your ignorance...but claim to be the master of the subject..

by BuyLowSellHigh | 21st Jan 19, 9:24pm 1548059046

Good night, my ESOL poet.

by PropertyPrices2Fall | 21st Jan 19, 9:25pm 1548059105

Good night, hope you get smarter tomorrow

by THE MAN 2 | 21st Jan 19, 6:51pm 1548049871

ChCh rental market is very stable going by our experience.
We have quite a sizeable portfolio and haven’t needed to drop a single rent to retain tenants as they know we are good landlords.
We have had to rerent 4 properties this last couple of months and have done so prior to the current tenants have departed.
Plenty of people looking some not so great but just a matter of doing your due diligence.