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.
The national median weekly rent has remained unchanged at $450 for the tenth month in a row, up a modest 2.3 per cent on September 2016 according to the latest Trade Me Property Rental Index.
Head of Trade Me Property Nigel Jeffries said it is the first time in over seven years that the national weekly rent has stagnated for such a long period of time. “We could be looking at a full year of flat rent at this point which is welcome news for tenants.
“Typically the rental market is pretty quiet this time of year as landlords and tenants have been bunkered down for the winter, but it’s unusual to have seen the national rent figure stagnant for so long.
“Rent increases could be around the corner though, the post-election uncertainty is ending and summer is coming which is when we often see significant shifts in the rental market.”
Future rental prices could spike
Mr Jeffries said that the new Labour-led government could have an impact on the rental market.
“Prior to the election, Labour indicated they had some big plans for the rental market including limiting rent rises to once a year. It remains to be seen whether that promise survives coalition talks but the threat of these changes could cause jitters for landlords and result in some rent increases for tenants.”
Auckland dips, Wellington steady
The median weekly rent in the City of Sails fell $10 to $520 in September, but was still up 4 per cent on last year. Mr Jeffries said while Auckland dipped, rental prices in the capital stayed steady at $450 per week, and were up 9.8 per cent year-on-year.
“Wellington experienced huge growth earlier this year, but since March it’s mirrored the national average sitting at $450 a week. Auckland has also been relatively flat - since October 2016 rents have fluctuated between $510 and $530.
“We expect to see some large increases early in the New Year as a large number of leases come up for renewal and the university year kicks into gear and boosts rental prices. Many landlords choose the summer months to review their investment and rents jump as a result.” Mr Jeffries added.
Bay of Plenty and Northland kick into gear
Mr Jeffries said outside the main metropolitan areas, it was a mixed bag with some landlords seeing double-digit growth, and others experiencing little to no change.
“Rents in the Bay of Plenty and Northland have kicked back into gear after a winter hibernation. Landlords in both provinces will have plenty to smile about with rents in the Bay of Plenty jumping $25 in September and back up to $450, while Northland rents jumped $20 to $395.
“These halo regions have seen rent demand change drastically in the last few years as the Auckland property market has gone crazy. The Bay of Plenty is once again level with Wellington as our second most expensive region, while Northland is just behind the record of $399 per week set back in in July.
“When we look back over the last five years of rents in the Bay of Plenty, we can see just how much the rental market has changed. Rents are now 50 per cent higher than they were in 2012 and 40 per cent of that change has been in the last three years. Compared to September 2012, tenants are paying $7,800 more a year in rent.
Mr Jeffries said South Island regions were not doing quite as well. The median weekly rent in the West Coast and Marlborough dropped 6 per cent to $235 and $320 respectively, along with Canterbury which fell 2.5 per cent on last year to $390 per week.
Strong growth for small houses
Mr Jeffries said the biggest rent increases was for small houses (1-2 bedrooms). “It now costs tenants almost $20,000 a year to rent a 1-2 bedroom house after the median weekly rent crept up 7 per cent to $375.
“This price hike has been largely driven by small houses outside Auckland which climbed 10 per cent in the last year to a new high of $330 per week, costing tenants an additional $1,560 a year. Small houses have been hugely popular for buyers recently, so it’s not surprising that we are seeing rent increases,” Mr Jeffries added.
The median weekly rent for large houses (5+ bedrooms) also reached a new record high, climbing 7 per cent to $750. Meanwhile, the cost to rent a medium-sized house (3-4 bedrooms) remained flat for another month at $500 per week.
Christchurch urban properties fall
Mr Jeffries said the median weekly rent for an urban property in Christchurch fell $10 on last month to $350, down 2.8 per cent on last year.
“The Christchurch rental market appeared to be stabilising in July, but this month the median rent for an urban property dropped nearly 3 per cent.
Mr Jeffries said urban properties in the capital remained resilient. “Units and apartments are still the hot favourite in the windy city, with double-digit growth in the median asking rent in the last year.”
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