Alanah Eriksen

Alanah Eriksen is the New Zealand Herald's property reporter, and assistant chief reporter.

Rents rising faster than wages and inflation

Increases of more than 9 per cent for rental properties in all 30 Auckland suburbs

Photo / File
Photo / File

Auckland rents are outstripping wages and rising faster than inflation, a four-year comparison shows.

Since 2009, median rent for a two bedroom home has risen 15 per cent in the city, from $333 to $382, and 14 per cent for a three bedroom home, from $438 to $500, according to figures by property management company Crockers.

It was well above the inflation rate of 8.7 per cent for the same period, according to Reserve Bank figures, and higher than Auckland's median weekly wage rise of 9.7 per cent, from $786 to $863, before tax.

The median income would just service the rent on a three-bedroom home in Ponsonby/Herne Bay/St Marys Bay area, the city's most expensive suburb at $712 a week.

It would not cover the rent for a four-bedroom home in Ponsonby or Remuera, which costs $911 and $893 respectively.

New Zealand's median wage of $560, a rise of 4 per cent in four years, would not cover the weekly rent for a three-bedroom home in 11 of Auckland's suburbs and 16 suburbs for four-bedroom homes.

Crockers analysed the number of new bonds received each month - supplied by the Real Estate Institute of New Zealand (REINZ) and the Department of Building and Housing.

The biggest rise was for a one-bedroom home in Takapuna/Milford, where the median price rose 55 per cent or $142, from $257 a week to $399 in four years.

All 30 Auckland suburbs had increases of more than 9 per cent each for two and three-bedroom homes. The only decreases over the years were a 5 per cent drop for a four-bedroom home in Devonport, from $681 to $648 - still in the upper end of the price range - and a 1 per cent drop for a one-bedroom home in Papakura, from $196 to $194.

Real Estate Institute chief executive Helen O'Sullivan said areas where rent had increased the most were in line with where house prices had increased the most in Auckland, where the median house price is currently $535,000.

ASB chief economist Nick Tuffley said the Consumer Price Index measure of rent had increased 18.6 per cent since 2000, compared with the overall CPI of 38 per cent.

"For quite a lot of that last 12 years, rents have actually increased at a much slower pace than CPI ... but the times when we have seen the rent measure lift relatively sharply has coincided with times when the housing market has been quite hot.

"And particularly at the moment, it is that game of musical chairs, with the relative strength of the population growth compared with the modest level of building.

"It means there's just that general supply tightness, whether it's homes for sale or homes for rent."

Rents had increased at a higher rate than CPI during the property booms of 2003/2004, 2007 and last year, he said.

Mr Tuffley said the latest wage increase figure, sourced from Statistics New Zealand's Income Survey, was calculated at before tax, and did not take into account the Government's 2010 tax cuts. So workers on mid-to-high incomes would have found their disposable income had increased by a slightly higher percentage than 9.7.

Mangere Budgeting Service's Darryl Evans said some residents of the suburb were starting to move even further out of Auckland.

Read more: Auckland city's rental prices rocket over past four years

- NZ Herald

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