“The cumulative increase in average new rents over this roughly three-year period has varied from 10 percent in Auckland to 40 percent in Gisborne and Taranaki.
“Interestingly, these regional rankings for the past three years are very similar to those for house price performance. This is perhaps unsurprising given the expected close relationship between an asset and its yield, but it also reinforces how important varying supply and population dynamics have been in determining relativities in house prices and rents across New Zealand.
“In particular, the supposed closing of New Zealand’s housing shortage in recent years looks to have been a largely Auckland and Wellington story, with many regions elsewhere still short.”
The rental vacancy rate in Gisborne is also the nation’s lowest.
“At the other end of the spectrum, rental markets in Taranaki and the eastern parts of the North Island – Gisborne, Hawke’s Bay, and Bay of Plenty remain extremely tight. Vacancy rates in these regions are close to or below 1 percent and have fallen over the past year.
“Amid a general upswing in rents, we might expect these regions — those that have the biggest supply deficit — to be most susceptible to strong increases in rents.
“I don’t think there’s any coincidence that Gisborne has experienced both the largest average increase in rents over the past few years, and that it also remains the most short of rental supply.
“The outlook for supply obviously depends, in part, on investor activity. Election uncertainty is clearly having an impact in this regard as investors await the ultimate fate of mortgage interest deductibility.”
Manaaki Tairawhiti is a regional umbrella group tasked with solving the housing crisis here.
The group's strategic advisor Judy Campbell said the statistics show the impact of the housing stock shortage.
"We simply don’t have enough houses to meet demand. Our research showed that there was very little development of private rental properties in Gisborne over a long period of time. This was because the cost of building or renovating for renting did not stack up in terms of the rental returns. This is why it has taken a central government intervention to get more affordable rentals into the market, with the sizeable build programme from Kainga Ora for social housing.
"Some landlords are taking advantage of this to charge a premium because they know desperate people will pay it. This of course means those with a stronger financial background win out over those with more limited means. The answers lie in in the building programmes underway with Toitū Tairawhiti building affordable homes for iwi, Kainga Ora and the small amount of private development for rentals. As these progress it will take some of the pressure out of housing demand. In the meantime landlords might want to think about how the rents they charge compare with the rest of the country, both in terms of price and quality."
