The nation's rental squeeze
The median rent for a three-bedroom home increased by 5.7 per cent in 2012, or by around $20 a week. However, tenants in parts of Christchurch are paying $50 a week more than they were a year ago, according to the latest figures from the REINZ.
Nationally, median rents increased by $20 week for both two-bedroom homes (up from $300 a week in December 2011 to $320 last month) and three-bedroom homes (up from $350 a week to $370).
Nut those increases may not be good news for prospective landlords because house prices have been increasing even more, putting a squeeze on rental yields (see table).
There were significant differences around the country with rents soaring in Christchurch, weakening in Wellington and ending the year on a mixed note in Auckland.
Median rents in many parts of Christchurch rose by $50 or more in 2012 (refer table, page 4), as the city struggled to cope with a loss of homes due to earthquake damage and rising demand for housing from workers moving to the city for rebuilding work (see page 12).
The biggest rent increase was in the Addington/Hoon Hay area where the median rent for a three-bedroom home increased from $340 a week to $395 in 2012.
That was closely followed by Riccarton where the median rent for a two-bedroom dwelling rose by $53 from $277 to $330 a week.
But in the capital, seven of Wellington's 11 rental districts posted declines. The biggest drop was in Miramar where the median rent for three-bedroom homes dropped by $50, from $540 to $490 a week, followed by Karori/Kelburn where rents on two-bedroom dwellings were down by $35 a week.
In Auckland, the country's largest rental property market by far, the picture was patchy at year's end.
Rents declined in the highly desirable inner city suburbs of Herne Bay, Ponsonby, Grey Lynn and Westmere and on most of the North Shore, while most other suburbs showed rental increases.
The biggest rises were in a cluster of suburbs a few kilometres from the CBD - Mt Albert, Sandringham, Balmoral and Mt Roskill - where median rents were up $30 or more on December 2011.
More modest rental increases of about $10 a week were posted in the west and south of the city where there is a high concentration of rental properties, and there were more substantial rises of $20 to $30 a week in the eastern suburbs.
There was also a large and unexpected drop in the number of new tenancies signed in December, although opinions are divided on what that could signal for the rental market.
The REINZ figures show that 5769 dwellings were let in December, a 23 per cent decline from the 7468 new lettings in December 2011.
Trade Me's head of property Brendon Skipper said there had also been a significant increase in the number of properties being listed for rent on the Trade Me website while the number of prospective tenants searching for homes had dropped.
In the three months to December, the number of rental property listings was up 8 per cent compared with the same quarter of 2011, while the number of prospective tenants searching for rental properties was down 5 per cent.
In Manukau the number of listings was up 24 per cent on the previous year and on the North Shore listings were up 15 cent.
Hamilton and Wellington also recorded double digit increases in the number of listings.
In Christchurch the situation was reversed, with the number of listings down 18 per cent on the previous year while the number of tenants searching the website for homes was up 22 per cent.
That could suggest that the demand/supply pendulum for rental properties outside of Christchurch was swinging back in favour of tenants and the days of big rental increases may be coming to an end. Nationally, the asking rents on Trade Me were only up 1 per cent (excluding Christchurch where they were up 26 per cent) compared with the fourth quarter of 2011.
Skipper believed many renters may have been taking advantage of low interest rates to buy their own homes and move out of the rental market. That would also have helped push up house prices, he said.
Peter Thompson, a director of Auckland's largest real estate agency Barfoot & Thompson, said there was a good match between supply and demand of rental properties at the moment.
"Traditionally January is our busiest month [for rentals] and what I've heard around the traps is that it's no exception this year. A lot of inquiry and activity is happening in the market. There's plenty of supply at the moment but that will be snapped up relatively quickly," he said.
However he also believed there were signs that rent increases were starting to flatten out.
Overall, rents were up about $10 a week compared with a year ago, he said.
Harcourts chief executive Hayden Duncan said demand for rental properties was still strong in Christchurch and Auckland's inner suburbs.
"We still have people looking for homes we can't supply, especially stand alone homes. But once you step out of those most sought after suburbs, then it's considerably softer," he said.
New Zealand Property Investors Federation president Andrew King said investors would be concerned that house prices had been rising faster than rents making it difficult to find acceptable returns.
- © Fairfax NZ News