Auckland tenants are shifting their attention away from the central city in the search for more affordable accommodation.
To follow is an excerpt from an article in Stuff. You can view the original here.
Trade Me data shows the region has hit a record median asking rent of $550 a week, up 3.8 per cent year-on-year.
Head of Property Nigel Jeffries said there was a growing demand for rentals outside Auckland City, as tenants looked further afield.
The number of inquiries in listings' first two days on the site has climbed in Manukau City (up 39 per cent), Papakura (up 16 per cent) and Waitakere City (up 12 per cent).
Inquiries fell 19 per cent in Auckland City compared to June last year.
"It's a well-established trend for buyers to look further out to get on to the property ladder and now it seems tenants are doing the same. It's not unexpected, as tenants must now weigh up the convenience of living in the city with the record-breaking rents we've been seeing. At some point convenience loses out to cost savings.
"Just like when buying a property, you get more bang for your rental buck when you move to quieter places, out from the centre of the city."
Jeffries said the most popular rental property on Trade Me Property in June was a three-bedroom house in Te Atatu South, which received a "staggering" 39 inquiries in the first four hours of being listed and 142 inquiries in the first two days on the site.
Nationally, strong growth in the regions saw the national median weekly rent climb 6.7 per cent, compared with 2017, to a new record of $480 in June.
Otago University students will face an extra battle to get accommodation this year. The data shows the scramble for 2019 Dunedin student flats has already begun.
The median weekly rent in the city is up 6.3 per cent year-on-year, to $361.50.
"It's the only place in the country where a huge number of rental properties are snapped up months before anyone moves in. Typically landlords will advertise their properties for students in June, but students won't move in until the following January when the University year begins," said Jeffries.
"This year a massive 58 per cent of Dunedin rental listings on site in June weren't available until January 2019. Otago students have to be well planned, well presented and often have to come up with the bond in advance to secure a good property."
Jeffries said the number of listings in Dunedin was down 14 per cent on June 2017, pushing prices up and making it much harder for tenants.
Rent in the Wellington region was up 6.7 per cent, year-on-year, at a record $480 per week for a third consecutive month.
Wellington tenants seem to be opting for a longer commute, too.
The Hutt Valley has seen a big surge in interest and rental prices: the median rent in Upper Hutt was up 18.4 per cent on last year to $450 per week, while Lower Hutt was up 8.8 per cent to $462.50 and Porirua climbed 11.2 per cent to $522.50. Wellington City, on the other hand, had a much smaller increase of 3.1 per cent to $500 per week.
"Tenants were more interested in rentals in Lower Hutt than any other area in June, with the number of inquiries in the first two days on site climbing a significant 60 per cent in Lower Hutt. In Upper Hutt, the number of inquiries was also up a solid 16 per cent while Wellington City fell 10 per cent on a year ago."
Jeffries said Wellington's most popular property in June was a three-bedroom house in Naenae which had 69 inquiries in the first two days onsite.
The median weekly rent in the Bay of Plenty and Manawatu/Whanganui reached a record high in June, up 10.5 per cent to $475 and up 10 per cent to $330 respectively. Across the board, most regions saw solid double-digit growth in June. Nelson/Tasman was the only area where rents dipped.
"It's rare to see such significant increases in the winter months when typically the rental market slows down. It could point to a record summer of growth as supply battles to keep up with demand," Jeffries said.
But compared to house prices, rent increases have been slow over recent years.
Infometrics chief forecaster Gareth Kiernan said it was a mystery why rents had not risen rapidly in recent years, particularly in Auckland, where there is a shortage of houses.
It has happened in isolated cases: A lack of property led to sharp rental inflation in Christchurch in 2012, Queenstown in 2016 and Kaikoura this year.
But he said more widespread increases were probably restricted by tenants' budgets.
"Landlords will generally set the rent at as high a level as they think the market will bear or tenants can pay," he said.
"And with income growth relatively subdued over the last six years, that has probably limited landlords' ability to put up rents. Furthermore, low interest rates have meant that debt servicing costs for investors have been relatively low, limiting the need to put up rents to maintain cashflow/profitability."
Unlike purchasers, tenants do not get any extra ability to pay from a low interest rate environment.