Rising prices make for rising rents

Strong growth in property asking prices in certain regional markets has been well-reported, as has the view that Auckland’s sky-high prices are, at least partially, to blame.

Yet rental price growth has lagged behind in many regions – until now.

Trade Me Property’s June rental data has just been released and it reveals that median weekly asking rents have surged in regions near to Auckland.

The Bay of Plenty led the way with a year-on-year rise in the median weekly asking rent of 16.7%, which left it at $420 per week.

In Northland the median weekly asking rent was up by 11.9% year-on-year and in the Waikato it was up by 7.5% year-on-year.

Head of Trade Me Property Nigel Jeffries said the three regions near Auckland surpassed the SuperCity in year-on- year growth in median weekly asking rent.

This was an indication of Auckland’s continued “halo effect” in both the for sale and rental markets, he said.

“Rising house prices in Auckland have seen activity in the surrounding regions boom.”

Other regions to see significant increases in median weekly rent include Marlborough (21.7%), Manawatu/Wanganui (up 14%) and Otago (13.3%).

In contrast, Auckland rents have not kept pace with the city’s rising prices.

The SuperCity’s median weekly asking rent rose by just 3% year-on-year. This left it at $510 per week in June, which was a drop from $520 in May.

Jeffries said that Auckland might holds the spotlight in the “for sale” market, but it was a different picture for rental properties where rents have stalled.

He also noted that while rents in the Auckland apartment market continue to go up, it was at a much slower pace than in the past.

The median weekly rent for an Auckland apartment was up 2% year-on-year, but a year ago the Auckland apartment rent growth rate was around 10%.

Once Auckland was excluded, the national median weekly rent was up 5.6% year-on-year to $430 a week.

Meanwhile, just three regions showed declines in their median weekly rent: Canterbury was down by 8.1%, West Coast was down by 7.7% and Gisborne was down by 1.7%.

It was the Christchurch market which returned the worst news for landlords.

Jeffries said the consistent downward trend in the city’s median weekly rent meant times were tough for landlords with empty properties.

“In June, the Garden City entered its 14th consecutive month of rental declines as landlords weathered the economic challenges facing the region.

“The median weekly rent sat at $400 a week in June, which was down 9% on last year, and down $50 per week since June 2014.”