According to TradeMe and their latest Rental Price Index released in October, rental demand is currently outstripping supply in the property market. While nationwide rent prices remain stable, Auckland continues to see price surges with record highs not seen since pre-Covid times. Both Auckland and the wider New Zealand market have experienced significant changes over the last few years, shaped by the pandemic, border reopenings, and varying economic conditions.
Impact of net migration and population increases on rent.
One of the central factors impacting rental prices and demand across New Zealand and Auckland is our net migration. With borders now fully reopened for international travel, both in New Zealand and across the globe, Statistics NZ has reported a net migration gain of nearly 87,000 people from June 2022 to June 2023. This influx of people has made it easier for landlords to find and keep quality tenants and led to an increase in demand and subsequently higher rent prices.
Tony Alexander, a leading economics speaker, has revealed a sizeable shift in tenant acquisition now there is a stronger and much healthier demand for rental properties. In his latest survey, a record net 22 per cent of residential property investors now say it's easy to secure good tenants, compared to -8 per cent in November 2022. Confidence in sourcing favourable tenants dropped in June last year when restrictions were lifting and Kiwis could move about more freely. Alexander attributes this to weak population growth from the pandemic, with net migrant inflows now countering this. Although 61,000 Kiwis moved abroad this year, New Zealand has seen a gross inflow of 169,000 non-Kiwis in the same period with a net flow of 122,000.
Auckland, a primary destination for many migrants, has seen a year-on-year rent increase of $70 since the borders reopened, hitting a median weekly rent of $670. According to TradeMe, Manukau and the North Shore are two of the country’s most expensive areas to rent, indicating that a large portion of residents opt for longer commute times in exchange for a quieter area to live outside the CBD. TradeMe Property Sales Director, Gavin Lloyd, says “After years of strong rent growth in Aotearoa’s main centres, it is now those districts slightly further from the main centres that have the highest rental price tag.” In the North Shore alone, tenants saw their rent shoot upwards of $30 in July, reaching a record high of $730 per week and an extra $1560 in income for landlords per year. Manukau jumped $10, sitting at $690 - $70 higher than the nationwide median rent at $620.
Supply and demand dynamics.
The current state of the market is one of heightened demand versus limited supply. Across the wider country, while supply dropped 17 per cent year-on-year, demand increased by 14 per cent. While this equates to higher rent prices for tenants, now could not be a better time for property owners and investors to place their properties up for rent. Enquiries for available rentals have increased by 11% year-on-year. With the market now returning to pre-Covid figures, Lloyd has suggested that the imbalance of demand versus supply will make it unlikely for landlords to reduce rent prices in the near future.
The disparity between supply and demand is most pronounced in Auckland. TradeMe listings in this region have seen a significant 26 per cent drop in September, while enquiries have spiked by 28 per cent.
The uptick in rental costs is not uniform across all regions or property types. Auckland’s median weekly rent for three to four-bedroom homes reached $770 in September. While cheaper than larger properties, Lloyd has also said tenants are now paying an additional 11.8 per cent for an apartment, a further 10 per cent for a unit, and up to 4.4 per cent more for townhouses. Across the wider New Zealand market, renters are paying more than they did last year, with the national median rent increasing by $45 per week.
Future rent developments.
As the vacancy rate in Auckland has halved in the last 12 months, it's clear that the city's market is tightening, and landlords are set to continue earning more from their investment properties. At Hammond & Co, we know that property management is so much more than simply coordinating tenancies and rent payments. As the rental market continues to change with ever-increasing layers of compliance and legislation, property owners need to have knowledgeable experts overseeing the management of their properties. With over 15 years of industry experience, you can rest assured your most valuable asset is in the best possible hands with Hammond & Co’s Business Manager, Gina Colcord.
If you would like to talk to Gina about joining our portfolio, you can contact us by email or phone Gina directly at 0508 426 326.