Quarterly Rental Update: Consistent Price Rise In First Quarter, Average Tips Over $600 In April

Auckland’s rental market maintained its usual pace during the first quarter of 2021, with the average weekly rent increasing by 2.3 percent on the same time last year, reaching $599 per week.

Barfoot & Thompson Director Kiri Barfoot says the increase is consistent with market expectations and pricing trends over the past two years: “We saw an identical rate of change, 2.3 per cent, at the end of March 2020, and the market moved at a comparable rate throughout 2019.”

She notes the figures are yet to reflect the impact of recently announced changes to the bright line test or interest cost deductions for residential rental property income.

“The expectations for the coming months are less clear as the market navigates through these changes.”

She says that while the company does not currently anticipate any significant shifts due the extended bright line test, limiting deductions on interest expenses will ultimately put further pressure on property owners’ operational costs.

“The relatively measured pace of change across the market as a whole over the past two years, which has sat well under the previous trend of 3 to 5 per cent rises year-on-year, indicates many landlords are taking a long-term approach to recouping rising costs.

“However, we may well see unintended consequences on rents and stock as landlord’s grapple with the practical reality of incorporating these latest regulatory changes into their balance sheet,” explained Ms Barfoot.

During April, the first month of the new quarter, average weekly rents rose 2.8 per cent year-on-year, tipping over the $600 mark, to $601, for the first time.

Averages by property size and location

For three-bedroom homes, which make up the majority of Auckland’s rental stock, the average rent reached $603 per week in March 2021 ($19 or 3.3 per cent more than in March 2020).

Meanwhile, properties with five or more bedrooms remained static with less than one per cent movement and weekly rents just $8 more per week than the same time last year.

The region with the highest rate of increase was Rodney, up 4.3 per cent or $25 more per week, likely mirroring the same upward pressure being seen in the local residential sales market.

In contrast, central city apartment averages continued to experience the brunt of the impact from the pandemic, with reductions most notable in the weekly rent cost of two and three-bedroom apartments compared to March 2020.

*Based on statistics drawn from a portfolio of 16,500+ Auckland rental properties managed by Barfoot & Thompson during the month of March 2021, and compared to March 2020. This includes both existing and newly signed tenancies. All prices have been rounded to the nearest dollar. Please note: While previous Quarterly Rental Updates have drawn figures from the entire three-month quarterly period, this update (and future intended updates) use figures from the final month of the quarter only. This method provides the latest pricing information. Monthly rental statistic reports are also available on the Barfoot & Thompson website under ‘Market Reports’ here.

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