The Rent Price Index provides a monthly analysis of the rental property market across the country. This is based on the rent prices being sought in listings from the past month.
Wellington tenants lashed by unseasonal weather are also struggling to hold their footing against increasing rental prices, according to the latest Trade Me Property Rental Index.
Head of Trade Me Property Nigel Jeffries said median rents in Wellington rose 6.8 per cent on last year to a new record of $480 a week. “It’s been a rough year for tenants in the capital as they’ve forked out over $1,500 more per year for a typical rental property, compared to 12 months ago. It’s not particularly good news for first home buyers who will be struggling to scrape together a deposit in the face of record-breaking rents.”
A sharp dip in the number of properties available to rent was exacerbating the issue in the capital, Mr Jeffries said. “Over the past year the pressure of demand overtaking supply has seen the number of rental properties decline by over 70 per cent. One flat in Wellington received almost 100 enquiries within hours of being listed, and 350 enquiries in a week. It’s a story that property managers around the capital can probably relate to right now.”
Mr Jeffries said while median weekly rents were breaking new ground, the rental market in Wellington tended to be seasonal. “We see a fairly steady rise as spring and summer arrive, reaching a peak in January before easing back as autumn approaches. We’re expecting that to be the case this year too. We suspect median weekly rents in the capital could break $500 over the next couple of months.”
Rents on the rise across the country
Median rents continued to edge up across the rest of New Zealand in January, with Auckland recovering back to its peak of $520 per week, up 4 per cent.
The national median weekly rent in January was up 3.4 per cent annually, unchanged from December last year. “While these figures are pretty modest in the face of spiralling house prices, this level of inflation is far above the level of consumer and wage inflation. It’s an ongoing struggle for those feeling stuck in the rental market,” Mr Jeffries said.
Around the regions
Hawke’s Bay and Waikato saw the biggest year-on-year leaps in median weekly rent, up 12.5 per cent and 11.4 per cent respectively. “While both regions saw the biggest jumps in the New Year, neither of them hit new records. That accolade was shared by Wellington at $480, Manawatu at $300 and Northland at $353 per week,” Mr Jeffries said.
Despite the continued rise in national median weekly rents, three regions have seen prices consistently fall. Canterbury and Gisborne declined in median weekly rent for the fifth consecutive month, while the West Coast had its second consecutive monthly dip.
Christchurch market the odd one out
Rental properties in Christchurch saw median weekly rents for large and medium-sized properties fall compared to the same time last year, in stark contrast to other major metropolitan areas.
“The rental markets in Auckland, Wellington and Christchurch are all very different in nature. Auckland is holding steady and in tune with the rest of the country, while Wellington is highly dynamic with significant pressure on tenants,” Mr Jeffries said.
“Christchurch on the other hand is being left in the dust, entering the third year of stagnant rental inflation. That’s good news for tenants in the Garden City who are benefiting from the balance of supply and demand, which is helping to keep things fairly muted.”
Christchurch median weekly rents dropped 5 per cent, with large houses (5+ bedrooms) down 5.7 per cent, medium houses (3-4 bedrooms) down 2.2 percent, and small houses turning in a 1.5 per cent lift.
Table 1: Median weekly rent by property size & region: January 2017 vs January2016
Auckland urban options show increasing demand
Mr Jeffries said Auckland’s appetite for urban living is gathering steam again, matching the scale of the rise in the city’s population.
“Apartments in Auckland shot up early last year to peak at $490 a week, but the remainder of the year saw the wind come out of the sails. However, rents are back on the up again with median rent in January up 7 per cent year-on-year to $480 a week. Wellington apartments also edged up 4.5 per cent to a new record high of $460 per week.”
Townhouses reached new heights too, up 7.2 per cent to $595 a week in Auckland, and up 14.6 per cent to $550 a week in Wellington.
Table 2: Median weekly rent by property type & region: January2017 vs January 2016
About the Trade Me Property Rental Price Index
The Trade Me Property Rental Price Index is the first report to provide a timely and comprehensive monthly insight into the rental market covering price trends by type and size of property across New Zealand.
The index is produced from Trade Me Property data of properties that have been rented in the month by property managers and private landlords. On average over 11,000 properties are rented each month and the report therefore provides the most comprehensive insight into this critical part of the property market for tenants, landlords and investors. The rental price index is calculated using the median rent in the month, this being an accurate statistical assessment of the current rent being charged by landlords and property managers.
More info: For information about the differences between the Trade Me Property data and bond data collected by Tenancy Services, please read this post (How High is the Rent?) by Dr Lucy Telfar-Barnard from the University of Otago.