Smaller homes attracting higher weekly rents
29th October 2019
Quarterly rental update:
Smaller homes attracting higher weekly rents compared to otherwise subdued price increases
While the rate of rental price increases across Auckland has continued to slow over recent months, some pockets of the market are still experiencing relatively strong price pressure.
Upmarket CBD apartments and two-bedroom properties overall, as well as homes in South Auckland and Franklin, were the standouts in the latest quarterly rental figures released by Barfoot & Thompson, reflecting real data from the company’s portfolio of more than 17,000 properties.
“The average weekly rent across all properties was $579, up 2.95% at the end of September when compared to the same time last year, or around $16 more per week,” says Director Kiri Barfoot.
This is the second quarter in a row the average rate of increase has held under 3% in keeping with a downward trend on price increases since early 2018, when weekly rent increases were typically closer to 5% year on year.
“However, there are some property types and locations that are bucking the trend,” says Ms Barfoot. “Most notable are the smaller properties, with weekly rents for two-bedroom homes growing by 4.06% year on year.
“This is driven in part by the growing number of higher-end apartments in and around the central city that fall into the two-bedroom category, although demand for this sized home elsewhere in the city remains strong also.”
Central city properties, all of which are apartments, have attracted weekly rents that are 6.15% higher year-on-year, although growth has softened since last quarter when the rate of increase surpassed 8%.
Ms Barfoot says the price growth in the two-bedroom sector of the market is particularly stark when compared to larger homes, which were seeing the opposite. “On average, weekly rents for homes with four or more bedrooms are hovering around 1% higher year on year, and some will have seen flat or declining prices during the year.”
Some areas of the region were also seeing slightly more upwards pressure on weekly rents than the norm, with South Auckland and Franklin properties renting for between 3.78% and 4.41% more than they were at end September 2018. Price growth was lowest in Rodney and the Eastern Suburbs.
Ms Barfoot adds that although there has been some softening of rental yields, they remain attractive when compared to many other investment opportunities, particularly bank interest rates. "There is probably no better time for consideration to be given to investing in the property rental market.”