But rents are expected to taper off later in the year
Median weekly rental prices have reached a new record high in 2023, increasing to $610 in May, just three months after they hit $600 for the first time, Trade Me’s Rental Price Index for May showed.
This means tenants are paying an additional $35 a week, or $1,820 more a year than in 2022.
Gavin Lloyd (pictured above), Trade Me’s director of property sales, said it appears “landlords are still feeling confident to ask for more,” after the large pay increases throughout 2022, but expects rent to “taper off later in the year as landlords respond to stalling wages and tenants lack of disposable income.”
Lloyd said the market is also “impacted by changes to government tax policies and higher interest rates.”
Trade Me’s data showed that Auckland was now the most expensive rental market, with the median weekly rental price of $660 in May, up $60 from the same period last year, as the supply of rental properties in the region fell 35% from last year while demand surged 55% year-on-year.
“After the widespread damage caused by the flooding earlier this year, we expected that prices would rise as the region battled with supply issues,” Lloyd said.
Auckland apartments hit record median weekly rental prices in May at $570 – and so did the unit and townhouses in the region, with median weekly rental prices of $530 and $700, respectively.
“This is what typically happens – when properties get more expensive, people look to cheaper places they can live in, and that’s usually smaller places like the urban properties,” Lloyd said.
Across New Zealand, the number of properties available to rent in May was down 19% from the same period the previous year, while demand was up 35%.
New Zealanders in the regions are also feeling the heat from some feverish rental price rises in May.
In the Taranaki region, weekly rent rise was the highest year-on-year, lifting by $80 a week from May 2022, to $620. That’s “an extra $4,160 a year people in Taranaki are paying in rent compared to last May,” Lloyd said.
The Queenstown-Lakes district, which had a relatively small number of listings, saw its median weekly rent rise by $150 from May 2022, to $750. The last time the district had a median weekly rental price of $750 was in February 2022, during the COVID-19 pandemic.
“Being a tourist mecca, Queenstown-Lakes has been at the mercy of the pandemic,” Lloyd said. “Prices in the district fell away substantially while the borders were closed and the number of people visiting and living there plummeted. However, as tourism ramps back up in Queenstown-Lakes, rental prices for the district are rising again.”
Lloyd noted a general lack of supply of rental properties in most places and said there were several factors driving this.
“During COVID, with the collapse of tourism and migration, we saw people pull their short-term rentals, and place those properties into the long-term rental market. What’s playing out now is the reversal of that,” he said. “People are moving their properties back into the tourism market where they can make money with fewer obligations on them.”
Not all regions suffered from a lack of supply, however. In Northland, the number of listings onsite from May 2022 rose by a massive 45%, while Manawatū/Whanganui and the Nelson/Tasman region saw the figure spike by 44% and 20%, respectively.
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