Free Suburb Reports
Find New Zealand's Fastest Growing and Highest Yielding Suburbs | Download FREE

Real Estate Investar Blog

Wellington leads the country in rental rises

auckland_skyline.jpg
approvals.jpgRenters have received a little less Christmas cheer, particularly in Wellington where demand for rental properties is soaring, according to Trade Me.

"It could be a tough market in the New Year," Trade Me's head of property Nigel Jeffries said.

Trade Me's rental index shows the national median weekly rent rose $5 to hit a record $445 in November, up 3.5 per cent on a year ago and the first rental rise in four months.

Have you had trouble finding an affordable place to rent in Wellington? Email newstips@stuff.co.nz

"It's been a subdued year for the rental market but this jump in November looks like the first of the typical summer increases," Jeffries said.

"Rents almost always increase in January as rental stock hits the market and landlords seize the chance to reassess the value of their rental property.

"We're seeing some decent median weekly rent jumps already, particularly in Auckland and Wellington, and we suspect more increases are imminent."

Wellington rents in particular were up strongly over the year and were expected to hit a peak in the New Year.

Rents in the Capital jumped 9.5 per cent annually to $433 a week, an increase of nearly $2000 a year, as tenancies came up for renewal.

"Wellington's rent prices are very cyclical – they build in October each year, and peak in January before a mid-year plateau," Jeffries said.

"October and November have already been extremely strong so we're expecting to see a pretty strong peak come January."

All types of housing in Wellington were in demand, but particularly larger houses with five bedrooms or more, which saw rents rose "an incredible" 11.9 per cent.

Rents for the most popular housing option, medium houses (3-4 bedrooms) was up 11.1 per cent.

Meanwhile, the Auckland market, which has been flat for most of the year, also fluttered back to life, up $10 on the previous month and up 4 per cent for the year.

Auckland's median rent is now a weekly $520.

"While it's fluctuated throughout the year the last three months have been strong – there are signs there that a record high is not far away," Jeffries said.

The Bay of Plenty also continued to be the standout region from a landlord's perspective, with rent up 10.5 per cent on last year at $420.

Elsewhere around the country, rents increased everywhere except Gisborne (down 14.3 per cent) and Canterbury (down 4.2 per cent).

Matt Watson, a principle at property managers Quinovic Kent Terrace, agreed Wellington rents were climbing as a shortage of rental properties developed across the city..

Porirua also had low numbers of rentals. "We're finding that almost 100 per cent of the rents are going up, between five and 10 per cent."

One of the compounding factors in the rental squeeze was the fact that everyone tended to move at the same time, meaning tenants were more likely to accept rental rises.

"The game of musical chairs that gets played in Wellington, which is far more accentuated than Auckland ... is that a high percentage of the leases end in January to March."

A second factor was a lull in apartment construction which was failing to keep up with the growing inner-city.

Just 300 new inner-city residents could mean the city needed another 150 apartments, and although another 300 or so units were in the pipeline with various projects, the growth continued.

Seven hundred students alone were expected to move into the CBD when Whitireia and Weltec's creative campus in Cuba St opened in 2018.

One-bedroom units and studios were becoming increasingly popular, Watson added.

"I think the more interesting the CBD gets because of the population increase - meaning the amenities can be supported - than the more living by yourself becomes viable because you don't feel like you're isolated."
Find New Zealand's Highest Yielding Suburbs!

Comments