Rental prices hit second-highest rate on record

Renters may be experiencing more financial pressure as they grapple with a 7.2% surge in rental property prices over the past year, marking the second-highest rate ever recorded.

Stat NZ’s most recent rental price index showed that rental costs for the entire rental population, including those currently in tenancies, rose 4.2% in the year to September, while the cost for new tenancies that started in September grew by a substantial 7.2%.

Auckland’s tenant population also broke new records, with the annual growth lifting to 9.4%.

Nick Goodall, CoreLogic head of research, pointed to strong population growth as a key factor for this, following a record growth in migration, which saw a gain of 110,200 in the year to the end of August, Stuff reported.

“Typically, new migrants tend to rent when they first move to a new country, and they also tend to go to the larger centres, so this will be one of the strongest influences on the Auckland record,” Goodall said.

There was also very low rental supply due to reduced number of transactions in the market, likely leading to a lower turnover of rental units as people stayed in their rental longer, he said.

When it comes to the monthly change from August to September, the stock measure of rental property prices saw a 0.3% rise, while the flow measure was flat.

Gareth Kiernan, Infometrics chief forecaster and director, said rental inflation continued to accelerate.

“Since the data began in 2006/07, this rate of growth has only been exceeded once, in September 2021, when there was a spike in rents following the COVID rent freeze and changes to the regulations about how often rents could be increased,” Kiernan said.

Heightened demand in Auckland was placing significant pressure on the availability of rental properties in the area. This uptick in demand was also evident in recent housing market data, which revealed a resurgence in house prices over the last four months.

“Stats NZ’s regional data suggests that there is also increasing upward pressure on rents across most of the rest of the country, but it is not as pronounced as in Auckland at this stage,” Kiernan said.

In Wellington, rents rose 4.4% annually, while there had been a 4.7% lift in Canterbury.

Trade Me Property data showed that median weekly rents in six regions had surged by 10% or more in the past year.

The property website’s latest rental statistics showed that national median rent held steady at $620 per week in September for the fourth month running, representing a 7.8% rise on the same period last year, when the national median in Trade Me rental listings stood at $575, Stuff reported.

View Stat NZ’s Rental price indexes: September 2023.

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