Quarterly rental update
Barfoot & Thompson which tracks the average rental price for thousands of homes across the Auckland region, says the pace of rent increases slowed during 2019, with the lowest rise recorded during the last three months of the year.
“The average weekly price tag for a rental property in Auckland during the October to December quarter was just 2.5% higher than it was during the same time last year,” says Barfoot & Thompson Director Kiri Barfoot.
“This means a renter will have paid around $15 more per week in December 2019, than in December 2018.”
During 2019, the rate of rent increases fell under 3% for the first time in many years, with figures representing an annual rent rise of around $16 to $18 per week for the average property. In comparison, the 2018 increase was closer to $20 per week year-on-year, and it was well above $20 throughout 2017.
However, Ms Barfoot notes that despite the slowing pace of price increases, the average weekly rent in Auckland was on track to reach $600 by the end of 2020.
“The average weekly rent for an Auckland home now sits at $582, and the current annual increase of around 3% will see it reach the $600 mark within the year.”
There was considerable range in the average rent prices within particular property sizes and locations across the city.
“Larger properties in the Central and Eastern suburbs set renters back over $1000 per week on average this quarter, while most one-bedroom properties across the city came in under $400, at an average of $384.”
Ms Barfoot says that one and two-bedroom homes continued to return higher price increases relative to the rest of the market, while larger properties were drawing lower increases – something that was likely to persist in the coming year.
“Over recent years we have seen a surge in the number of higher-end city apartments which pushed the average price for these segments much higher than norm. While this has now settled, these smaller properties continue to see year-on-year quarterly increases above 3%.”
Properties in South Auckland, Franklin and rural Manukau returned the highest rates of increase compared to other areas of the city at 3.6% and above, albeit a lower increase than the same periods the previous year. Rodney was the only area to see a higher rate of increase over last quarter, moving from 2.2% to 2.8%. Price growth was lowest in the Central and Eastern suburbs.
Looking at the first month of activity in 2020, Ms Barfoot says there remains a clear need for more rental properties in the Auckland market and encouraged people to consider investing in rental property or expanding their existing portfolios.
“There is strong demand for more quality rental properties in Auckland and yields in many segments of the market still present an attractive opportunity when compared to other traditional savings and investment options,” she adds.