Auckland tenants pay a rental premium of over $7,000 a year

The median Auckland rent rose by another $5 a week in June to $495 per week, while the rest of the country held steady at $360 per week. This represents a premium of $7,020 per annum for tenants in New Zealand’s largest city.

Head of Trade Me Property, Nigel Jeffries, said the median weekly rent for an Auckland property rose by 7.6 per cent over the past year, up $35 per week year-on-year. “The rental market in the City of Sails is humming the same tune as the city’s for sale market, and contrasts with the rest of the country where median rents are more subdued.”

The Trade Me Property Rental Price Index measures trends in median weekly rents for residential properties on Trade Me Property rented out by real estate property managers and private landlords over the past month. Around 11,000 rental properties are let out via Trade Me Property each month. This month’s edition also sets out information distinguishing between the Auckland market and the rest of the country.

Onward and upward in Auckland

Auckland rents have shown a significantly higher increase over the first half of 2015 when compared to the latter half of 2014. “In 2014, rents were rising at an annual rate of around 2 per cent a year, but the first six months of 2015 have upped the ante with rents rising at an average of 6 per cent, and they’re now heading toward 8 per cent in the year to June,” Mr. Jeffries said. “The median weekly rent for an Auckland tenant is now over $25,740 compared to just under $24,000 per annum in June 2014.”

The median Auckland weekly rent has risen by 23.8 per cent over the past five years from $400 in 2010 to $495 in June, adding just under $5,000 to the annual cost of renting an Auckland property. “A $95 jump in weekly rental costs isn’t trivial, but pales into insignificance when compared to the 62 per cent rise in expected selling price for Auckland properties over the same period,” Mr Jeffries said.

The state of (the rest of) the nation

The median weekly rent for a property elsewhere in New Zealand was unchanged between May and June, stagnating at $360 per week. This represents an increase of just 2.2 per cent, up $10 per week on a year ago. “Compared to Auckland, it is apples and oranges around the rest of New Zealand. The last couple of months have seen a hefty slowdown in the pace of median rent increases, when compared to the second half of 2014 where they ticked up 7 per cent.”

The median weekly rent for a property outside of Auckland has increased over the past five years from $305 per week in 2010 to $360 per week, up 18 per cent. The bulk of this increase occurred in 2013 where rents rose from $320 to $350 per week.

Ups, downs and plateaus in the regions

The rental market outside of Auckland remains subdued in comparison. Eight of the 14 regions reported growth in median weekly rents, four regions saw falls, and two were unchanged.

Taranaki was a standout with a 12.5 per cent rise in median rent to $360 per week. The region has seen significant growth over the past two years, adding over $3,500 to the annual rental bill for tenants in the region. Gisborne also posted a double-digit year-on-year growth in median rent, up 11.1 per cent to $300 per week.

Canterbury saw a significant 4.4 per cent fall in median weekly rent over the past year, following a bumper four-year period in which rents peaked at $485 per week in March 2015. In June 2015 they slipped to $430 per week.

Further south, Otago posted its second consecutive monthly decline in median rent, down 5.5 per cent in June to $300 per week. It is well below the peak of $345 per week that it reached in August 2014.

Waikato also reported a year-on-year fall in median rent, down 4.3 per cent to $335 per week. Despite the dip, median weekly rents in the region have edged up steadily over the past two years. The median weekly rent in the Waikato is $8,000 cheaper per annum than in neighbouring Auckland.

By size: Christchurch subdued

The median weekly rent for all properties in The Garden City was unchanged or declined year-on-year, matching the trend from last month. The Christchurch rental market for all houses peaked in March with median rent of $495 per week, before easing back to $440 per week this month. In June 2013, the median rent was $400 per week.

The median rent for a property in Auckland is now $495 per week, up 7.6 per cent year-on-year. This means that a rental property in Auckland now costs an additional $1,800 in rent per annum over the past 12 months, and a total cost of $25,740 per year.

Table 1: Median weekly rent by property size & region: June 2015 vs June 2014

Unit rents reflect strong regional demand

Median rents for units grew strongly outside of Auckland, up 7.7 per cent on a year ago to $280 per week. Median rents for compact living ticked up noticeably in Waikato (up 6.4 per cent to $250 per week), Hawke’s Bay (up 9.1 per cent to $240 per week) and most significantly in the Bay of Plenty (up 14.0 per cent to $285 per week).

The Auckland apartment market continues to demonstrate strong demand, driving median rents up 9.8 per cent in the past 12 months to a peak of $450 per week. At the same time the median rent for a townhouse eased by $25 to $530 per week, down 1.9 per cent on the previous year.

Table 2: Median weekly rent by property type & region: June 2015 vs June 2014

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