Rents leap to end 2016 on a record high

Media Release
16 January 2017

Rents leap to end 2016 on a record high

December was another tough month for tenants in New Zealand with the national median weekly rent jumping to a record $450, according to the latest Trade Me Rental Index.

Head of Trade Me Property Nigel Jeffries said that 2016 started relatively sedately, and accelerated significantly in the last few months of the year. “We’ve seen rents across the country grow pretty sharply from October, and we expect to see further jumps in January when landlords reassess the financial equation for their investment property and when a number of tenancies come up for renewal.

“Typically December is reasonably quiet as everyone winds down into the Christmas period, but this December we saw rents jump 7.1 per cent on a year ago – the largest monthly change we’ve observed all year. With the median weekly rent now at $450, Kiwi tenants are paying just over $23,000 a year for their rental property.”

Capital rents sky rocket
Mr Jeffries said Wellington was one of the strongest rental markets in the country, with median weekly rents up by 9.8 per cent in the last year to equal the national median of $450.

“Wellington started the year very quietly but took off in the second half of 2016. In the last 12 months there has been a $2000 increase in the annual cost of renting a typical property in Wellington.

“We don’t think January looks like it will be any easier on tenants either as it’s the traditional peak for the capital’s rental market. Wellington properties are attracting far more interest than other cities
with more people watchlists per property in Wellington than Auckland and Canterbury.”

Auckland slows slightly
In December the median weekly rent in Auckland fell $10 to $510, but Mr Jeffries said that rents were up 3 per cent on the same time last year and Aucklanders could expect rent figures to bounce back.

“Auckland has been very strong in the last few months and January is a very busy time in the Super City – we wouldn’t be surprised to see the median weekly rent hit another record early in 2017.”

Around the regions
Marlborough was the standout region for the final month of 2016, rising over 10 per cent in the past month alone to a new record high of $375 a week. “Marlborough had median weekly rent rises earlier in the year, but in such a small market the earthquake will have a significant impact on rents. No doubt demand has increased in the region following the disruption in Kaikoura,” says Mr Jeffries.

Double-digit median rent rises were also seen Waikato (11.4 per cent), Bay of Plenty (10.8 per cent) and Hawke’s Bay (16.8 per cent).

Christchurch remains a tenants’ market
The Garden City’s rental market has remained stagnant for over a year-and-a-half after it rebounded off the back of the earthquake rebuild. In December 2016, landlords were given a glimmer of hope with the median weekly rent rising slightly from $395 to $399, but well below the peak of $495 back in March 2015.

Mr Jeffries said even with the rise, rents are still down 5 per cent on this time last year and the city remains a tenants’ market. “Unlike Auckland and Wellington, Christchurch tenants are in the box seat. Rents are barely moving and there are plenty of options in the market.”

Large homes strong
Rents for large homes (5+ bedrooms) are mirroring the strong jumps in asking prices for these properties observed in the for sale market. Median weekly rents for these large homes have jumped 5.2 per cent on last year, but in Wellington and Auckland rents have surged by 18.9 and 12.7 per cent respectively.

By comparison, in the for sale market, the average asking price for a large house is up 17 per cent.

Auckland apartment market continues to edge sideways
Auckland has more than half of the country’s apartments and that share continues to grow as more new apartment builds come on the market.

Mr Jeffries said the high supply of apartments in Auckland has meant that the median weekly rent in the city has risen just 2.8 per cent over the past year. “Auckland apartments hit $462 in December, but they’re lagging behind the rest of the market and well down on the on the peak of $490 they hit in April 2016.”

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Full release with charts, tables, notes: Media_release__Rents_leap_to_end_2016_on_a_record_high.pdf

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