PHOTO: Trade Me spokesperson Casey Wylde. SUPPLIED
While experts claim New Zealand’s rental market remains stable, Otago has shattered expectations with a dramatic surge in rental prices. In December, rental costs in Otago skyrocketed by 4.2% month-on-month, leaving all other regions trailing behind. Even more striking is the 11.6% year-on-year increase, significantly outpacing Southland, the next highest region, which recorded a 6.8% rise.
This unprecedented jump is coupled with a 19% drop in rental listings in Otago, compared to a 13% nationwide decline, according to Trade Me Property. The squeeze on supply and skyrocketing demand paints a challenging picture for renters in the region.
Why Are Otago Rents Rising So Quickly?
Trade Me Property’s Customer Director, Gavin Lloyd, attributes the sharp rise to seasonal trends and regional dynamics.
“This downturn in listings aligns with the Christmas break, a time when prospective renters hold off on their searches,” says Lloyd. “For Otago, the larger drop in supply could also be due to university students securing rentals in Dunedin and landlords potentially increasing rents or selling properties to offset rising costs.”
The region’s unique factors, such as the student rental market and limited availability, have driven this surge, making Otago a hotspot for rising rental prices.
Nationwide: Modest Changes Elsewhere
While Otago leads the pack, rental prices across the rest of New Zealand showed only modest shifts:
- Auckland and the Bay of Plenty both saw 1.5% declines, with median rents at $660 and $665, respectively.
- Wellington’s rents held steady at $650, while regions like Hawke’s Bay experienced a 3.2% increase, reaching $650 per week.
- Northland recorded a 1.7% rise, bringing its median weekly rent to $590.
Spotlight on Listings: Supply Trends in Focus
While Otago grapples with dwindling listings, other regions saw a spike in rental availability. Marlborough topped the list with a 93% year-on-year increase in listings, followed by Hawke’s Bay (+83%) and the West Coast (+72%).
Despite these increases in supply, rising property costs in Otago and high demand have created a perfect storm for rental inflation.
What This Means for Renters
As Otago’s rental market continues to heat up, renters may face increased competition and higher costs in 2024. The situation underscores the importance of monitoring regional trends, as local factors such as tourism, university housing, and property costs disrupt nationwide stability claims.