New Zealand Rental Prices Surge: A Winter Challenge for Tenants

According to the latest data from TradeMe, rental prices across New Zealand have seen a staggering 9% increase compared to the previous year. This means landlords are demanding an average of $50 more per week from tenants than they were last year.

The company revealed that the national median rent has reached $620 per week, surpassing May’s record of $610. In June of the previous year, the median rent was $570 per week.

Kevin Lloyd, the General Manager of Real Estate Sales at TradeMe, expressed concerns about the growing burden on tenants, stating, “With an additional cost of $50 per week for tenants, this winter has become a challenging time.” He further explained that this amounts to an annual increase of $2,600 in rent, putting considerable pressure on tenants amidst rising living costs and limited disposable income.

While landlords may still consider raising rents, Lloyd analyzed that due to the current economic uncertainty, the cost of living, and insufficient disposable income for tenants, rental prices may reach their peak. He also predicted that many tenants may choose to stay in their current homes over the next few months, leading to either stable or reduced rental rates.

The data revealed that rental prices increased in all regions over the past year, with six regions experiencing double-digit growth rates. Masterton experienced the most significant surge with a 14.9% increase, reaching a median rent of $580 per week.

Auckland and Canterbury followed closely, with rents rising by 11.7% and 11.1%, respectively, resulting in median rents of $670 and $550 per week.

However, Lloyd pointed out that the rate of rent increases in some regions is showing signs of slowing down, stating, “In the Wellington, Canterbury, Hawke’s Bay, Manawatu/Whanganui, and Bay of Plenty regions, there were no fluctuations in rental prices between May and June.”

Additionally, the rental prices in Northland, Waikato, Taranaki, and Nelson/Tasman regions decreased from May to June.

While this cooling trend may bring relief to tenants, Lloyd cautioned that whether it will persist beyond the typical winter slowdown remains to be seen.

Nationwide, the supply of rental properties in June decreased by 19% compared to the same period last year, while demand increased by 35%.

On a monthly basis, the national rental property supply saw a 5% decrease in May, with demand dropping by 6%.

Lloyd remarked, “As spring approaches, it will be interesting to see whether rental prices continue to rise or if landlords will lower rents to attract potential tenants.”

On the other hand, BNZ Senior Economist, Mike Jones, predicted that the pace of rental increases has accelerated, especially in areas with limited supply, and expects the upward trend to continue.

As tenants grapple with rising rental costs and landlords navigate the uncertain economic landscape, the future of New Zealand’s rental market remains an important area to monitor closely.