Rents rise in Auckland ahead of expected influx of international students
Auckland rental properties with an asking-rent of less than $400 a week have all but dried up, even for a unit or a small one-bedroom home, according to Trade Me.
Trade Me's latest rental market data shows an 8.4 per cent year-on-year increase in Auckland rents.
That is the second-highest annual rent increase in five years, after a 9 per cent jump in the year to September 2011.
Head of Trade Me property Nigel Jeffries said even the smallest unit or one-bedroom home would cost a typical Auckland tenant at least $400 a week.
"You're now looking at $499 per week for a typical property, taking annual rent costs close to $26,000 – about $2000 more than a year ago. It piles more pressure on to the cost of living for tenants," Jeffries said.
Trade Me's data was released amid warnings that a top academic ranking for Auckland University was likely to at least double its number of international students, putting further pressure on the rental housing market.
The university's position in the latest QS World University Rankings has improved to 92, from 94 last year.
It is the only New Zealand university ranked in the top 100.
READ MORE: University of Auckland tops NZ rankings
MIT topped the list, followed by Imperial College London and Cambridge University.
William Cairns, of mortgage lender General Finance, said he expected another 5000 or 10,000 international students to enrol at Auckland University because of it.
The university has 6000 international students at present.
"There is no university in the whole of India as good as Auckland. We are going to get another influx, the council needs to be planning for that."
He said the increase in student numbers meant it would not be long before renting a house with flatmates was out of reach for many Auckland students.
"We're going to see a huge flood of them coming in, double and treble bunked in apartments," Cairns said.
ASB chief economist Nick Tuffley said migration figures were already showing a sharp lift in student numbers.
The latest Statistics NZ data showed more than 60,000 people migrated to New Zealand in the August 2015 year.
But Tuffley said students would have less of an impact on the housing market than migrant or returning families because they would usually live in large groups.
Trade Me's data suggests that since 2010, median weekly rents have risen 28 per cent in Auckland, or $5500 a year.
One and two-bedroom properties' rents have increased 8 per cent year-on-year to a median $413 a week.
But renters are still getting off lightly compared to buyers – the average Auckland asking price for a residential property for sale increased about $80,000 over the first eight months of this year and has increased 64 per cent over the past five years.
But Jeffries said renters would feel the price rises more acutely. While low interest rates have made higher prices more affordable for purchasers, renters have to find more money out of their pay packets to cover rent increase.
"There's no real relief from that. If rental costs are up $2000 for a lot of people they have to earn an extra $3000 to cover that. The increase has not been matched by wage increases so they are digging further into their disposable incomes."
That would mean the amount rents could increase would be limited, he said.
By contrast, Christchurch's rental market is losing its heat and Jeffries said it could have further to go.
Median asking rents in Christchurch have risen 43 per cent over the past five years.
In March, renting in Christchurch became more expensive than renting in Auckland, when Christchurch's median rent peaked at $495.
But Jeffries said the market then "hit the wall" and has reported a decline in asking-rent every month since.
The city's median asking rent fell 5 per cent in August to $429 per week.
Jeffries said factors driving up the market, such as people being forced into rental accommodation during the rebuild, had abated and there was more room for rents to come down.