KEY POINTS:
Here's a perfect example of how the economy has gone topsy turvy and where the real money is now being made.
It's now more expensive to rent a three-bedroom house in Wellington than in Auckland.
Rents for three-bedroom houses in Wellington have risen 16 per cent since last May as incomes and employment growth have outpaced the rest of the economy.
Rents in the capital for three-bedroom houses topped those in Auckland last month for the first time.
Figures obtained by interest.co.nz from the Department of Building and Housing show the median rent for Wellington three-bedroom houses rose to $440 a week from $380 a week in May last year.
In Auckland in the same sector, the three-bedroom median has risen from $420 a week last year to $430.
Nationally, median rent has been flat at $300 a week in the past three months, rising from $280 at this time last year.
The figures represent the nation's economy in microcosm.
Wages and salaries in the public sector have been growing faster than those in the private sector.
Wellington property prices have risen faster in the past two years than in the other regions.
Retail spending growth in the region has grown faster than the rest of the country.
At some points in the past two years, retail spending has been growing at an annual rate of nearly 10 per cent in Wellington.
Life for property investors has been extremely tough for the past 12 months or so in most parts of the country, except Wellington.
Many market observers thought rents would keep rising this year because effective interest rates were rising, as were maintenance and construction costs.
The end of capital gains would also put pressure on landlords to put up rents to recover at least some money from often loss-making investments in cash terms.
The sharp slowdown in new home construction was also thought to be another factor pushing up rents, as the total supply of rentals was restrained.
The reality has been different. Apart from Wellington, rents have been static or falling.
Auckland apartment rentals have fallen since February, and three-bedroom rentals have been steady to slightly lower since the beginning of the year.
This is because "accidental landlords" were forced to put their properties on to the rental market in March, April, May and June after failing in their attempts to sell their houses at the peak of the property cycle in January, February and March.
Our measures show a 30 per cent-plus increase in rental listings during the autumn and winter that coincided with a fall of about 5 per cent in the number of properties listed for sale.
Property investors everywhere, except in Wellington and some provincial areas benefiting from the dairy boom, face a double whammy of falling property prices and flat-to-falling rents.
This says a lot about our economy at present.
Those who invested in areas servicing the Government have done well. Property investors elsewhere will just have to grin and bear it.
Bernard Hickey is the managing editor of www.interest.co.nz, a website for investors and borrowers wanting free and independent news and information about interest rates, banks, finance companies and the economy.
