Demand for rentals running hot

It’s the tight rental markets in Wellington and Auckland which tend to attract the most attention but demand for rental properties has jumped nationwide.

The number of enquiries on rental properties across the country was up by 17% year-on-year in December, according to the latest Trade Me Rental Price Index.

Trade Me Property’s Aaron Clancy says they saw unusually strong demand in December when the rental market is typically pretty quiet.

“However, we’re now seeing more Kiwis try and secure a rental earlier than before and beat the busy period we see from January through to March.”

The rental squeeze in many markets is a simple case of supply and demand, he says.

“While demand is up 17% on the year prior, supply was up just 4% - that’s putting pressure on tenants and landlords know they can put up the price.”

Clancy says the national median weekly rent climbed 4.2% on December 2018 to remain at its $500 per week record.

“Looking ahead to the rest of the year, it’s not great news for tenants. With demand on the rise, we expect to see more record breaking rents across the country.”

It’s worth noting that Statistics NZ’s latest rental price index also shows rents were up nationwide in December. It has them up by 3.4% year-on-year.

Meanwhile, Trade Me’s data records that twelve of the country’s fifteen regions saw an annual rent increase in December with many experiencing strong double-digit growth.

Southland and Nelson/Tasman saw the largest jumps after the median weekly rent rose 15.3% to a new high of $340 per week and 13.4% to a record $465 per week respectively.

Rents in Northland and Taranaki also reached new highs of $450 and $425 respectively.

However, it was Wellington’s rental market which delivered the most dramatic results.

The median weekly rent in central Wellington City rose by 6.2% year-on-year to crack the $600 mark for the first time ever in December and enquiries were up by 8%.

Clancy says the Wellington region is the most expensive in the country at a record breaking $580 per week and the number of enquiries they are seeing on rental properties – including in traditionally quieter areas - is extraordinary.

Demand for rentals in Upper Hutt and Porirua rose 21% year-on-year in December, while South Wairarapa saw an 80% jump in enquiries and rentals in Kapiti Coast saw 16% more enquiries than the year before.

While tenants are facing record breaking rents and plenty of competition in Wellington, there is some good news after the number of Wellington rentals onsite rose 10% year-on-year, Clancy says.

“Unfortunately, however, this increase in supply doesn’t look like it will meet the huge demand in the region. We expect to see rents climb steeply throughout January, February and March of this year.”

Auckland also experienced a significant increase in rental enquiries. with the number of enquiries rising 20% on December 2018.

But Auckland’s median weekly rent remained at its all-time high of $560 per week for the third consecutive month in December following a 1.8% annual increase, Clancy says.

“So far landlords aren’t responding to the high demand with higher rental prices but if demand continues like this we think rents will climb over the next few months.”

Marlborough and West Coast were the only regions to buck the trend and see rents fall on December 2018.