Ray White chief economist Nerida Conisbee tells Ryan Bridge what Kiwis heading to Oz can expect from the housing and rental market.
The median rent has dropped and is now sitting at $650 in Auckland after dipping 2% from last year, with one economist saying the market is flatlining.
It is the first time since 2009 that the median rent has dropped.
Property data firm Cotality, formerly CoreLogic, has compileddata from the Ministry of Business, Innovation and Employment (MBIE), which it says shows “rental growth has generally petered out in recent months”.
The data showed the national median rent dropped 0.3% in the three months to May. Cotality described it as “not a big fall, but still the first since late 2009″.
The median rent has dropped, now sitting at $650 in Auckland after dipping 2% from last year, with one economist saying the market is flatlining. Photo / Michael Craig
Auckland’s median rental price dropped 2%, while Wellington City saw a decline of 0.8% to $602. Tauranga and Christchurch’s rents were also soft, Cotality said.
Chief property economist for Cotality, Kelvin Davidson, told the Herald rents would always continue to rise, but this data showed it had peaked in the short term and movement was flat.
Davidson said a backdrop of tougher economic conditions and rising prices for goods and services had created an “affordability ceiling” where tenants could not afford high rents.
“This affordability ceiling is now acting as a natural brake on further rent increases,” he said.
“And while it’s still expensive to be a tenant, the balance of power has shifted slightly. It’s not suddenly easy to rent, but it is nevertheless a friendlier market for tenants than it has been in recent years,” he said.
Chief property economist for Cotality, Kelvin Davidson, says rents will always rise, but this data shows it has peaked in the short term and movement is flat. Photo / Peter Meecham
The president of Renters United, an advocacy group for tenants, said the lower prices were not making much difference for people at this time.
“If incomes were coming down alongside a decrease in rents, then people would actually feel the benefit of lower prices,” Zac Thomas told the Herald.
“Against a backdrop of difficult conditions, there may be some exceptions, but it is unlikely to make a difference for renters.”
Davidson said the supply of rental properties had risen with investors returning to the market and new-build properties being completed.
“Overall, this has contributed to a softening in the rental market, with conditions gradually shifting in favour of tenants.”
Davidson said there was a sharp rise in rents post-Covid.
“Borders reopened and net migration spiked.
“Many new migrants tend to rent, especially given the foreign buyer ban, and that demand placed pressure on key centres such as Auckland.”
“At the same time, rental supply was tighter. Investor activity had dipped due to rising mortgage rates and tax rule changes, which arguably meant fewer rental properties were added to the available pool than otherwise might have been the case.”
Raphael Franks is an Auckland-based reporter who covers business, breaking news and local stories from Tāmaki Makaurau. He joined the Herald as a Te Rito cadet in 2022.
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