PHOTO: Trade Me’s latest Rental Price Index
Tenants Struggling This Winter: Trade Me’s Latest Rental Price Index Reveals
Rental Prices Soar, Putting Pressure on Tenants
According to Trade Me‘s latest Rental Price Index, tenants in New Zealand are facing a tough winter, with average weekly rent increasing by $50 compared to the same time last year. This rise accounts for a significant 9 per cent increase in the country’s median weekly rent, reaching a new record high of $620 in June. Gavin Lloyd, Trade Me’s Director of Property Sales, expressed concern about the impact of these rising costs on tenants, noting that this translates to an extra $2,600 annually in rent for them.
Rising Costs and Economic Pressures
Amidst a confirmed recession and increasing costs of living, landlords are still confident in raising rental prices. However, Mr. Lloyd suggests that the market may be approaching its peak, as the lack of disposable income begins to take a toll on tenants. Despite the annual increase in rental prices, some regions are experiencing a slowdown in growth. Many tenants are expected to stay put in their current rentals instead of looking for new ones in the coming months, potentially leading to a stabilization or drop in rental prices.
Regional Rental Trends
In June, all regions in New Zealand witnessed an annual increase in rental prices, with some experiencing double-digit percentage growth. The largest jumps occurred in Marlborough, where rents rose by 15 per cent, reaching a new record of $580 per week. Auckland saw a 12 per cent increase, setting a new high of $670 per week. Canterbury remained steady at May’s record of $550, observing an 11 per cent annual increase.
On the other hand, Northland and Hawke’s Bay saw the smallest increases, with median weekly rents at $600 and $570, respectively. While some regions experienced significant growth, the monthly trend suggests a slowdown in rental price increases in certain areas.
City Living Driving Demand
Urban centers continue to witness a high demand for apartments, townhouses, and units. Apartments, in particular, were popular in June, with Auckland and Christchurch reaching new record highs of $575 and $500 per week, respectively. Townhouses also saw demand, with Auckland’s townhouse rents rising by 4 per cent to an average of $710 per week. Mr. Lloyd believes that the appeal of smaller, warmer, and more convenient city dwellings may be contributing to this demand, as it helps people save on transportation and other costs.
Supply and Demand Stabilizing
June witnessed a significant decrease in the number of properties available for rent, down by 19 per cent compared to the same period last year, while demand rose by 35 per cent. However, when examining the monthly trend, both supply and demand seem to be stabilizing. Nationwide supply dropped by 5 per cent from May, and demand decreased by 6 per cent. Mr. Lloyd speculates that high rent prices and the winter season might be discouraging people from seeking new rentals, leading to this stabilization.
Taranaki, however, stood as an exception, experiencing an 8 per cent increase in listings and a 6 per cent rise in demand compared to May.
Future Outlook
As winter tends to be a time when people prefer to stay put rather than move, Mr. Lloyd suggests that the real test will come in the spring. It remains to be seen whether interest will surge during that period or if the high rent prices will push landlords to lower their prices to attract potential tenants. The market’s response during the upcoming season will be crucial in determining the rental price trends in the future.