Property sales across New Zealand may have slowed but rents have increased, though really not that much since 2007, as rent increases are still around 5% per annum. This is likely due to both low mortgage interest rates and low wage growth which constrains tenants from paying dramatically higher rent.
Corelogic has reported that the slowdown in house prices in recent months has meant that nationwide gross yield has flattened at just over 3%.
Auckland’s gross yield remains the lowest at 2.1% while Dunedin holds its investment appeal based on potential gross yield.
However in February this year the median weekly rent of a 3-4 bedroom house hit $500, that’s $26,000 annually. Over the past 5 years rents have resin over 30% for 3-4 bedroom homes.
Overall rental prices are up 4.7% (including Auckland) across the country compared to a year ago.
The biggest movers over the past year up until March 2017 have been Northland +12.5%, Marlborough +19.7% and the West Coast +19.6%. The south regions increase can be due to contract workers for post-earthquake and also low housing stock pushing up rental prices. Also post-earthquake has had an impact on Christchurch rental prices, they are down 3.7% over the last year.
More housing is available now in Christchurch including a lot of new developments giving renters more options to choose from. Plus smaller towns and new suburbs have given renters more options outside of Christchurch with an easy commute to work.
Recently there has been a shift in the capital with rents increasing in certain areas like Miramar, Strathmore and Mt Cook but other suburbs are showing negative rental growth. Don’t always believe what you see in the media with reports saying a massive rise in rental prices in the capital. It all depends on the location and suburb of the rental property.
Overall the rental market is solid especially in major towns or cities as with unaffordable housing taking its toll more and more kiwis are renting for longer periods of time while trying to save for a deposit.
There are now 102 suburbs in Auckland that have an average value of over $1million. This certainly puts the demand on housing affordability with many potential first time home owners in Auckland maybe thinking of renting for life?