Rent Levels February 2024

As we went into summer and the new year figures show that rent levels hit new highs across the country. The median rent across New Zealand is now $625 for the month of December – the first increase in almost 6 months. When compared to December 2022 tenants are paying an additional $45 per week on average.  TradeMe’s Property Sales Director Gavin Lloyd comments “Many people will be watching the new government as recent legislation has reshaped the Reserve Bank to a singular mandate – to bring down inflation.

 All property5+ bed3-4 bed1-2 bed
New Zealand$625 +7.8%$1,095 +11.7%$695 +6.9%$540 +9.1%
Auckland$660 +7.3%$1,150 +12.7%$750 +7.1%$580 +9.4%
Wellington$650 +0.0%$1,315 -2.6%$750 +3.4%$570 +3.6%
Christchurch$560 +12.0%$930  $650 +8.3%$500 +11.1%

We don’t know why there was no % change for Christchurch 5 bedroom+ rent. However, the large increases in the other areas is a reflection of the strong demand (competition creates higher prices), high migration (internal and external) and high student numbers (especially impacts the 5 bedroom+ category). One change that we have noted is an increasing interest in 1-2 bedroom properties. For many this is all they need but previously they may have liked to have had a ‘spare’ room. Rent increases have led to down-sizing. For others the attraction of an newly built, central city property is the attraction and as we know there are many of these hitting the market.

There are several indications that the property rental sector is secure as we enter into 2024.

  • According to the Real Estate Institute of New Zealand January 24 has seen slower sales and a significant increase in the number of properties available. A total of 2,995 properties sold during the month. Despite there being more properties to choose from buyers are being cautious given cost of living increases, inflation, interest rates increases and government reforms.
  • There is a looming crunch coming for the residential construction sector as new dwelling consents tumble. Figures from Statistics NZ show that 37,259 new dwellings were consented – down 12,299 fewer (-25%) than in 2022.  This despite of record migration and an extreme housing shortage.
  • The Reserve Bank is to introduce new regulations that will restrict the size of home loans. The proposed ‘debt to income’ (DTI) restrictions will compliment existing measures such as loan-to-value restrictions (LVR) the difference being that a households income will be the basis for loan levels. For example, the ratio may be 6:1 so if earning $100,000 the maximum loan will be $600,000. (the ration is yet to be confirmed but expected to be 6 for owner occupiers and 7 for investors ). The Reserve Bank see this restriction will enhance financial stability and will lower the likelihood of widespread household defaults. It is thought that the new criteria may help first-home buyers as it may impact on many investor buyers thereby reducing competition. It is thought DTI’s will be introduced mid-year.

Recent changes to the Unit Titles Act have come into effect. Those of you with properties on Unit Titles may wish to refer to estimates the real estate industry earned around $1.56 billion in gross sales commissions in 2023. A big figure but in fact the lowest level since 2019. This is a drop of $780 million from the peak of 2021.

This coincides with a significant drop in the number of registered real estate agents in the country.