Tenants say times are tough, even if rent growth is slowing

By Susan Edmunds of RNZ

Christchurch woman Tara has seen her rent increase from $480 a week to $580 in the past two years - and she’s now living in a smaller house.

She said she had to move because the owners wanted to move back in.

“It took four months to find something ‘affordable’ that was dry and near my son’s kindy.”

She said she was starting to feel real pressure. Her sole parent support is $618 a week and she also receives Working for Families and child support. She says without those, she would be in real trouble.

She has not accessed any additional support.

“I often find the applying for assistance more stressful than helpful and I have been doing small amounts of contract work which makes it practically impossible to get government assistance because they need proof of projected earnings which I don’t have.’

Tara said she felt there needed to be rent controls to stop rents increasing so fast.

But data shows there may be some good news for tenants like her.

In August, rents increased 0.3% month-on-month by the stock measure, which includes all tenancies. On the flow measure, which is new tenancies, they fell 0.1%.

On an annual basis, rents are up 4.3% on the stock measure and 1.4% by flow.

At the end of last year, rents were increasing at a rate of more than 7% a year.

BNZ chief economist Mike Jones said a slowdown in rent rises was what had been expected. He said rents were likely to flatten and could fall a bit.

CoreLogic chief property economist Kelvin Davidson said monthly movements in data could be affected by seasonal factors.

Year-on-year, Auckland rents were down slightly and Wellington was up, he said, but overall the rental market had slowed “quite dramatically”.

“The heat has definitely come out. There’s a switch from a landlord’s market in 2023 to a tenant’s market in 2024.”

He pointed to surveys showing it was harder for investors to find good tenants.

“Rents are very high in relation to income so that would be a natural restraint on growth anyway. You’ve got more listings coming on to the market so there’s more choice for tenants. Demand isn’t necessarily falling but it’s not rising as much as it was because migration has slowed down.”

He said first-home buyers were still moving into owning homes and freeing up rental properties, and people were leaving the country, which could also mean houses became available.

“The fact that a lot of the departures at the moment are New Zealand citizens, they’re probably young and living one or two per house, so they’re probably freeing up more houses than the typical renting family.”

Some people might also be choosing to rent their homes rather than sell them while the housing market was soft, he said.

There were also new builds coming into the market being bought by investors to be rented out.

“These factors are all part of the reason why listings have gone up at the same time that demand isn’t as strong as it was. You don’t tend to see rents fall to any great degree so it’s probably a story of them flattening out for a while.”

Davidson said people on a long-term leases tended not to see rents increase as fast as the wider market. People who could continue with an existing lease might not see much rent increase at all for the time being, he said.

“Those factors aren’t going to change overnight.”

Incomes were a driver of rent and unlikely to lift sharply in the next few years, he said.

Property investor Steve Goodey said there seemed to be an over-supply of homes in some places. That was driven by fiscal policy, tax breaks and “cheap money” to build them, he said.

“Now money is expensive, rents are easing and nobody wants to buy them so the developers are not building more but the damage is done.”

Another tenant, Kathy, said she felt that tenants were vulnerable, even if things were improving.

She said she moved 20 minutes out of Whanganui to a property that was about $200 a week less in rent than in the town centre.

“The rentals we looked at in February 2022, that were the same size as our one, were damp, no section, no animals allowed. I am lucky to own a hybrid vehicle as I work in town and kids go to school there. If not, petrol would put us in a similar condition.

“Even though rent might be getting a bit better, I still look frequently and the prices seem to be in the $500 to $650 per week range for a three-bedroom home with a section. As a single mother with main custody, and chronic health issues. It is really scary out there. I feel very lucky with our position. We can cover the basics and have a warm dry home.”