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.
June 2016 Auckland rents stall while neighboring regions surge
Tenants in Auckland’s surrounding regions are feeling the pinch as median weekly asking rents continue to rise.
The median weekly asking rent in Auckland rose just 3 per cent over the past year, but in contrast Waikato jumped 7.5 per cent, Northland 11.9 per cent and the Bay of Plenty 16.7 per cent according to the latest Trade Me Property rental index.
Head of Trade Me Property Nigel Jeffries said that while Auckland holds the spotlight in the for sale market, it was a different picture for rental properties. “The housing market in the City of Sails presents real challenges for first-home buyers as average asking prices broke records again, at $848,100 in June. But things are more manageable on the rental front, with the median weekly asking rent up just $15 a week on a year ago.”
Mr Jeffries said the three regions near Auckland surpassed it in year-on-year growth in median weekly asking rent, indicating Auckland’s continued “halo effect” in both the for sale and rental markets.
“Rising house prices in Auckland have seen activity in the surrounding regions boom. Tenants in the Bay of Plenty took a $3,120 hit to the wallet over the past year, with median weekly rent for a typical property up a whopping 17 per cent on a year ago to $420 a week.”
Northland also outpaced Auckland with a 12 per cent annual increase in median weekly rent, up $10 a week in June to $330, and adding $1,800 to the annual bill for tenants.
Other regions seeing increases in median weekly rent included Manawatu/Wanganui, Hawke’s Bay, and Otago. Excluding Auckland, the national median weekly rent was up 5.6 per cent per annum to $430 a week.
No let-up in the weak Christchurch market
Mr Jeffries said it had been a decent year for tenants in Christchurch with a consistent downward trend in median weekly rent, but it was a different story for landlords with empty properties.
“In June, the Garden City entered its 14th consecutive month of rental declines as landlords weathered the economic challenges facing the region. Median weekly rent sat at $400 a week in June, down 9 per cent on last year, and down $50 per week since June 2014.”
Regional divergence in rents
There were 11 regions that saw a lift in median weekly rent in June, with Marlborough reaching a record high of $350 a week and showing the biggest jump at 21.7 per cent on the previous year.
“Tenants are paying 2 per cent more a year nationally but that figure is ten times higher for tenants in Marlborough where $3,200 has been added to the annual rent,” Mr Jeffries said.
Joining Marlborough with new record highs were five other regions: Bay of Plenty, Southland, Waikato, Hawke’s Bay and Manawatu.
Just three regions showed declines in median weekly rent, with Canterbury down 8.1 per cent, West Coast down 7.7 per cent and Gisborne 1.7 per cent. Taranaki was unchanged.
Smaller dwellings not immune
Small houses (1-2 bedrooms) continue to see a strong lift in median weekly rent especially in provincial regions, Mr Jeffries said. “The cost of renting a small house is rising with the tide as evidenced over the last few months. Nationally, asking rent was up 6 per cent in June to $350 for small houses, boosted by a 6 per cent lift in Auckland to $425 per week.”
He said Wellington’s rental market is under pressure because of a lagging inventory of houses for sale. “Wellington is buzzing, with the overall property market seeing strong growth thanks in part to a very low number of properties for sale. For rentals, medium-sized houses saw median weekly rents up 8 per cent per annum to $475 a week, while large houses were up 10 per cent per annum to $650 per week.”
Table 1: Median weekly rent by property size & region: June 2016 vs June 2015
Urban rents continue to creep up
Apartments, townhouses and units have seen median weekly rents driven upward by investor activity and increased interest, Mr Jeffries said.
“We’ve seen median weekly rents for units on the up. Across Auckland and Wellington, median weekly rents for units were up 5 per cent and 7 per cent respectively – but Christchurch was down 4 per cent.”
The Auckland apartment market also continued to edge up slowly, ticking up 2 per cent year-on-year to $460.
“This may seem like a modest rise, but a year ago median weekly rents for apartments were rising by more than 10 per cent year-on-year. It’s worth noting that renting an apartment in Auckland is now over $2,500 more expensive than it was two years ago.”
Table 2: Median weekly rent by property type & region: June 2016 vs June 2015
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