Rental Market Shows Signs Of Cooling Off Ahead Of Winter

New Zealand’s rental market is beginning to show some signs it may be cooling off after a red hot summer, according to Trade Me’s latest Rental Price Index.

Trade Me Property Sales Director Gavin Lloyd said the national median weekly rent remained unchanged for the second consecutive month in April at $540 per week. “While April’s median weekly rent marks a 4 per cent year-on-year increase, if we look closely at our data from March and April, since the government’s new housing policy was announced, we’ve seen price growth begin to slow, for now.

“In April we also saw demand for rentals fall 17 per cent nationwide when compared to March, with every region experiencing an annual drop in demand apart from Gisborne and West Coast. This will come as welcome news for tenants and could help to alleviate some pressure on the market.”

Mr Lloyd said supply was another contributing factor. “The number of rentals on the market in April was down 9 per cent on the month prior.

“We expect that one reason we’re seeing less rentals come on to the market is because renters are staying put. It’s a highly competitive market and many tenants will be happy to stay where they are rather than enter the hot rental market.”

Looking ahead at the next few months, Mr Lloyd said we may see the market continue to quieten down. “The winter months are typically much quieter with everyone hunkering down in the cold, and that coupled with the new string of government initiatives designed to take the heat out of the market, may mean we see prices head south.”

Auckland rents remain at $590

“Auckland’s stagnant rent and falling demand is another indicator that we could be headed for some respite.” In the Auckland region, the median weekly rent in April was $590 for the fourth month in a row while demand fell 17 per cent on March.

Mr Lloyd said as we saw nationwide, supply in the Auckland region fell 7 per cent on March.

“Looking at Auckland City, the median weekly rent was also unchanged on March at $560 while demand fell 16 per cent and supply dropped by 9 per cent.

“The most expensive districts in the Auckland region were Papakura ($630), North Shore City ($625), and Waiheke ($625).”

“April’s most popular rental listing in the country was a two-bedroom house on Puhinui Road in Papatoetoe, Manukau City for $500 a week. It received 76 enquiries in its first two days onsite.”

Wellington rents up $5

The median weekly rent in the Wellington region reached $595 last month, increasing by $5 or 0.8 per cent on March. “This puts Wellington’s median weekly rent $20 behind its all-time high of $615 recorded in January.

“Looking at Wellington City, the median weekly rent increased by 1.7 per cent month-on-month to $610 in April, $30 shy of the district’s all-time high also recorded in January.”

Demand for rentals in the Wellington region was down by 25 per cent last month when compared with March, while supply was down by 14 per cent month-on-month.

“If this rate of decline in demand continues in the Wellington region we would expect to see rents ease off in the next few months.

“The most popular rental in the region last month was a two-bedroom unit on Melbourne Road, Island Bay, Wellington City for $495 per week. The property received 52 enquiries in its first two days onsite.”

Around the regions

Mr Lloyd said looking across the regions, it was a mixed bag. “Canterbury ($450), Taranaki ($460), and Waikato ($495) bucked the national trend to reach record-breaking highs last month. While Bay of Plenty and Southland followed in Auckland’s footsteps and saw no change in their median weekly rents in April when compared with March.

“If we look at demand, we can see tenants are staying put with every region seeing a decrease in demand in April when compared with March, apart from Gisborne and West Coast.” Mr Lloyd said the biggest drops were in Wellington (-25%), and Nelson/Tasman (-28%), which saw demand drop by more than 20 per cent month-on-month.

Supply also decreased across the board with Hawke’s Bay being the only spot that saw an increase in market supply (4%) last month when compared with March, while demand dropped by 10 per cent month-on-month. In response, the median weekly rent actually dropped by 3 per cent in April when compared with March.

“Over the last couple of years we have seen regional rents take off as they played catch up with the main centres. Now with the government’s new housing policy in place it will be interesting to see how the coming months shape up if demand continues to fall and prices slow to bring relief to tenants across the country.”

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