Smaller properties, better rent growth
Tuesday 29 October 2019
Two-bedroom properties and central city apartments are seeing the strongest growth in rents in the Auckland region, new Barfoot & Thompson data reveals.
By The Landlord
Rents across the Auckland region have increased of late, with the average weekly rent coming in at $579 at the end of September, according to the agency’s latest quarterly rental update*.
That’s an increase of 2.95%, or about $16 per week, on the same time last year. But the rate of rental increase is slowing.
Barfoot & Thompson director Kiri Barfoot says it’s the second quarter in a row the average rate of increase has held under 3%.
“It is in keeping with a downward trend on price increases since early 2018, when weekly rent increases were typically closer to 5% year on year.”
However, there are some property types and locations that are bucking the trend, she says.
“Most notable are the smaller properties, with weekly rents for two-bedroom homes growing by 4.06% year-on-year to a regional average of $488 per week.
“This is driven in part by the growing number of higher-end apartments in and around the central city that fall into the two-bedroom category, although demand for this sized home elsewhere in the city remains strong also.”
Barfoot says the price growth in the two-bedroom sector of the market is particularly stark when compared to larger homes, which were seeing the opposite.
“On average, weekly rents for homes with four or more bedrooms are hovering around 1% higher year on year, and some will have seen flat or declining prices during the year.”
Alongside two-bedroom properties, central city properties, all of which are apartments, are doing well.
Over the quarter ending September, they attracted weekly rents that are 6.15% higher year-on-year which left the weekly average at $527.
But rental growth in these properties has softened since last quarter when the rate of increase surpassed 8%.
Some areas of the Auckland region were also seeing slightly more upwards pressure on weekly rents than the norm.
South Auckland and Franklin properties were renting for between 3.78% and 4.41% more than they were at end September 2018, while price growth was lowest in Rodney and the Eastern Suburbs.
Barfoot says that although there has been some softening of rental yields, they remain attractive when compared to many other investment opportunities, particularly bank interest rates.
"There is probably no better time for consideration to be given to investing in the property rental market.”
*Barfoot & Thompson’s statistics are drawn from the portfolio of 17,000+ private Auckland rental properties that are managed by the agency.
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