Landlords in Auckland have seen the median rent increase by 8.4% since this time last year and by 27.8% over the last five years.
Head of Trade Me Property Nigel Jeffries said that even the smallest unit or 1-bedroom home will cost a typical Auckland renter $400 per week.
“You’re now looking at $499 per week for a typical property, which takes annual rents close to $26,000 – about $2,000 more than a year ago. “
This is a significant increase but, over the last five years, the average asking price for an Auckland property has gone up by almost 63%.
Further, in the first eight months of 2015, the average asking price has increased by almost $80,000.
Jeffries said landlords have had some mortgage relief due to low interest rates, but the higher asking prices are helping to drive rents up.
“It is also due to high demand from Auckland tenants. If you look at the migration figures alone, there is a lot of people pressure in the rental market at the moment.”
However, he doesn’t believe the current pace of rental growth is sustainable – because of affordability pressures for tenants.
“The only way it could be is if there was increased wage growth, but that is not happening and we don’t see wage growth picking up for some time.
"In fact, the level of migration could put downward pressure on wage growth.”
This means there is a looming “stop point” for Auckland rent increases.
Meanwhile, in Christchurch, landlords are seeing median asking rents continue to decline.
They are down almost 5% on a year ago to $429 per week, which continues the negative trend of the previous three months.
Jeffries said the decline was due to increased supply along with a lessening of demand from tenants.
“A couple of years ago, there were a lot of people in the rental market who would usually be homeowners plus there were all the rebuild workers. Both those categories of tenants have dropped off now.”
Christchurch rents are likely to continue declining for a while, he continued.
“However, rents had run along way ahead of everywhere else in New Zealand– with an increase of 43% over the past five years.”
He said the Christchurch rental property market simply “hit the wall” earlier this year.
The news is also not great for Wellington landlords.
In the capital, median asking rents eased in August to $380 per week.
This was down from a peak of $440 in January and unchanged from the same time last year.
Jeffries said the Wellington market continues to be very flat, just like its housing for sale market.
“There is no population pressure and jobs are still moving north. Until you start to see increased population pressure in Wellington, rents are unlikely to go up.”
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