More homeowners seem to be holding on to their first homes as rental properties when they want to move up the property ladder - and that may be contributing to flat rent prices.
House prices are hot in Auckland but rents have stayed relatively static for some time. Auckland's median house price is now $555,000 according to the Real Estate Institute of New Zealand (Reinz), well up on the $500,000 recorded at the same time last year.
Trade Me said the rents of properties advertised on its site were up just 2 per cent on the year before, and the Ministry of Business, Innovation and Employment said they had fallen in the year to May.
BNZ chief economist Tony Alexander said he gave a presentation to a group of real-estate agents last week, and those from Auckland noted that more people were choosing to not sell. One agent told him that of 93 people who came to an open home, only three had houses they wanted to sell.
The number of listings in June was the lowest in seven years, Realestate.co.nz said.
But a good supply of rental property was coming on to the market, which was keeping rents down.
Auckland's average rents have trended down since the start of the year, despite rising house prices, according to research from property firm Crockers. It estimated the average return for Auckland properties was now 4.38 per cent, down from 4.7 per cent in May last year.
But Alexander said few New Zealanders bought properties looking at the running yield. "Most are looking at long-term hold situations and looking at capital gain, maybe with a reasonable return along the way."
Reinz spokesman Bryan Thomson said investors were told to look at the pure numbers but most wanted investment properties in areas they were familiar with, or could drive past easily. They were investing to provide for their retirements rather than for income, he said.
"When conditions are good, and interest rates are attractive, confidence comes back. There is more investment activity now than there was six or 12 months ago."
Some of the city's leafiest suburbs offer the cheapest comparative rents. Mt Albert, Mt Eden and Devonport reported median weekly rents that were 0.07 per cent of the median sales price last month, compared with Manurewa's 0.1 per cent.
Lucy and Scott Walker decided to hold on to their property in Northcote when they moved to Mairangi Bay. "We thought it would be a better long-term investment to hold on to it and we had enough equity to do that."
Alexander was surprised people were turning their first homes into investments. "It's not something I thought of when I went from my first to my second in 1993. Prices are high so it indicates a willingness to remain relatively highly indebted."
A Crockers spokeswoman said tenants were becoming more picky because more stock was available, and many long-term tenants had left their properties to buy first homes.