What's going on in Auckland's rental sector? Photo / Doug Sherring
Barfoot & Thompson’s new annual rental data shows the areas where rents have risen the fastest - and one part of the city showed a dramatic 7.2 per cent 12-monthly rise.
That jump is hugely ahead of the rises of 1 per cent to 4 per cent in most other areas of the city in the year to March.
The agency runs 19,000 rental properties in Auckland and is second only as a privately owned business to the state’s Kāinga Ora in terms of the number of rentals it manages.
Samantha Arnold, property management general manager for the agency, released data that showed Franklin and rural Manukau had the fastest-rising rents.
Tenants there now pay an average $443/week for a two-bedroom place, $543/week for a three-bedroom place, but $635/week for four bedrooms.
People in some of those South Auckland areas are some of the poorest in the city and rents are a huge component of their outgoings. Many can’t afford to own their own places, so are long-term tenants.
Suburbs included are rural Manukau, Pukekohe, Waiuku, Beachlands, the Awhitu Peninsula, Karaka, Ardmore, Clevedon, Whitford, Maraetai, Kawakawa Bay and Orere Point.
Rural Manukau isn’t the city of Manukau but more lifestyle blocks from the Redoubt Rd area and surrounds.
The 7.2 per cent is a big jump compared to the area where rents rose the slowest annually: central Auckland west. Rents only rose 0.4 per cent annually there. Next-slowest was the North Shore where rents only increased 1.9 per cent.
Kiri Barfoot, a director, said: “Who knows why the rents are up so fast there? I can’t answer that. I talked to the Pukekohe property manager and they have more than 1000 properties. They say there’s a lot of demand out there. It could be more migrants coming into New Zealand and some people working in Hamilton but living in Franklin due to the ease of using the new Waikato Expressway.
“There are a lot of new builds out there, so it makes a lot of sense that rents are going up there,” Barfoot said.
Second-fastest rising rents to Franklin/rural Manukau were in the Pakuranga/Howick area, up 4.93 per cent in the year to March.
“Again, it’s more new builds being rented. People working from home decide they don’t need to go into the city, so it makes those areas more popular. Many people work from home two to three days a week. Also, those areas were less affected by the flooding compared to West Auckland,” Barfoot said.
Third-fastest rising rents were in South Auckland, up 4.31 per cent in the March 2023 year.
Barfoot said more migrants might be responsible for rents rising there.
First-home first buyers who can’t fulfil their dreams are often carrying on renting in South Auckland, as well. Those buyers holding back meant rental properties in that area remained popular. The areas was also geographically widespread and had many multi-generational families living there.
CBD apartment rents were up 3.4 per cent to an average $529/week. Previously, this segment of the city’s rental market saw falls in 2020 and 2021, and remained relatively static last year, hit by Covid-19 border closures and lockdowns which reduced demand.
“This is the first quarter in several years that we’ve seen growth in the average weekly rent for Central Auckland over 1 per cent,” the agency’s Arnold said today.
The agency’s property management division once had 16,500 but now managed 19,000 this year.
Barfoot said generally, Auckland rents were rising.
“Auckland’s growing. We’re growing. There are plenty of houses being built. At the moment, you go around Auckland and one house is being replaced by 10. A lot of those are rental properties,” she said.
“It doesn’t surprise me that rents are rising. The Government has made a lot of rules, some good but also some of which put pressure on landlords financially,” Barfoot said.
More Aucklanders were seeking to rent than there were properties available. That’s a change in the last year, she noticed.
“This time a year ago, it was easier for tenants. Some rentals were empty,” Barfoot said.
She had seen an image of queues of tenants on social media recently but is unsure if the shortage is that bad.
Traditionally, it has been cited that New Zealand has around 600,000 rental properties that house around 1.3 million people. The private sector provides around 510,000 or 85 per cent of that. The Government owns or leases around 72,000 rental properties or 12 per cent.
But official data shows a much lower number: only 398,000 bonds were lodged with Tenancy Services by February this year, up from 383,000 a year ago.
A decade ago, only 320,565 bonds were lodged on residential properties.
Trade Me said the national median weekly rent hit $600 for the first time in February, up 4 per cent or $25 in the last year.
The Herald’s Chris Knox produced this graph (below) showing the number of bonds lodged throughout New Zealand up to February this year.
That is despite landlords threatening to sell due to major government changes aiming to address the inherent power imbalance between landlords and tenants.
At the start of this year, Trade Me found tenants were paying more because rents hit a new $595/week high in January, up $25/week annually. Wellington, where places are in particularly tight supply, scored a median rent of $660/week.
That snapshot was taken around the time students were particularly active in the market.
Gavin Lloyd, Trade Me Property sales director, said in February that national rents escalated by 4 per cent in the year to January.
Although that is less than the rate of inflation at 7.2 per cent, he said any price rises made life harder for tenants. The new high follows three months when rents remained stagnant at around $580/week during last year’s final quarter.
The Herald reported this month that students nationwide say they are suffering from rising living costs and some accused landlords of profiting from student allowance increases.
More tertiary students were being forced to skip class and apply for hardship grants to make ends meet as rents rise, while “mega landlords” continue to line their pockets off the back of student allowance increases, one Herald story this month claimed.
The student loan for living costs and student allowance rose by $20 last month following a $25 weekly increase in Budget 2022.
That increase has been said to not be available to the majority of students but the extra cash often ends up going to landlords through rent increases instead, a claim said.
Auckland Central Green Party MP and spokeswoman for tertiary education Chlöe Swarbrick told Focus: “They increase rents in anticipation of student allowance going up which feels I think to many grossly unfair.
“That’s not happening as a result of any special innovation or work that those landlords may have done, but simply because they know that students may have more money in their back pocket,” she said.
New Zealand’s biggest build-to-rent project could be a harbinger of change.
Kiwi Property Group is halfway through building its first 295-unit $200m development at Sylvia Park, Mt Wellington. Those units will be rented in perpetuity and chief executive Clive Mackenzie thinks they could mark a change.
He thinks people will put down sticks for a long time: “We want people to stay,” he says, referring to overseas studies showing that if you make a friend in BTR housing, your chances of staying increase exponentially. “We’ll offer furnished places too.”
Thousands more build-to-rent apartments are planned and many are rising.
Mark Smith, a senior ASB economist, said yesterday residential rents showed a moderating trend on the back of the housing market downturn.
Dwelling rents were the largest component in the Consumer Price Index, with a weight of 10.3 per cent.
His rent comments were accompanied by commentary on food price rises which he noted were ingrained and widespread.
“We expect headwinds from the cooler housing market to contain rises in dwelling rents going forward, although the swift and sizeable turnaround in net immigration presents some upside risk,” Smith said.
Auckland crane numbers fell to an eight-year low.