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20 Jan 2020

NZ Renters Struggling

Renters continue to struggle across New Zealand, with limited housing stock and rising prices putting renewed pressure on the rental market. According to the latest data from Statistics NZ, rental prices were up 3.4% in December compared to the year before. While renters in Auckland had a reprieve in 2019 due to the ongoing market slump, rental prices in Wellington and many regional markets climbed dramatically.

According to Trade Me data, Auckland rental prices rose just 1.8% year-on-year, as property prices continue to struggle across the city. While there has been movement in Auckland over recent months, both prices and listings remain subdued compared to previous years. Based on data from Barfoot & Thompson, the median Auckland price in December was down -1.1% from the year before, and annual sales volume dropped -4.4%. While median prices in Auckland climbed somewhat towards the end of the year, people renting have been under less pressure than renters in other parts of the country.

Rental prices in Manawatu/Whanganui rose a massive 15.2% between December 2018 and December 2019, and rents in Wellington were also up a huge amount at 10%. The median weekly rent in Wellington was $550 in November, which climbed to $585 in Wellington City. These figures were up 10% and 6.4% respectively over the year, with demand for rentals up a massive 14%. The most expensive rental property in New Zealand right how is listed in Wellington at $5000 a week.

The strength of the rental market in some of New Zealand's biggest cities is starting to rival the regional centres, where rents have been growing at a healthy rate for some time. According to ?Infometrics economist Brad Olsen, "Some pockets of the country continue to see strong rental inflation, like in Manawatu-Whanganui, Nelson, and Southland. Areas with limited rental supply but a rising population of renters will continue to see higher prices."

Trade Me Property spokesman Aaron Clancy is in agreement, saying the situation is only likely to continue in coming months as students return to heated markets looking for affordable rentals: "Unfortunately for tenants, this is a trend we expect to continue in 2020... "As house prices continue to climb around the country, tenants are staying in rentals longer to gather a deposit, and that's putting pressure on the market. In areas like Wellington city and Auckland city we reckon we will see record-breaking median weekly rents in the coming months."

The current state of the rental market is an incentive for new buyers, with some people trying to escape high rents in heated markets and others looking to leverage conditions by generating rental yields. Rental demand is outstripping supply in most parts of New Zealand, and Auckland is likely to join the party sooner or later. While the situation will remain tough for renters in the months ahead, the current environment of low interest rates and high rental costs is a great incentive to climb the property ladder.