Renting in Auckland is not for the faint-hearted. Photo / NZME
Sharp rises in rents will make many young people and productive workers seriously consider whether Auckland is the best place for them to live.
This is according to Infometrics principal economist and chief executive Brad Olsen, who tells The Front Page podcast that rents in Tāmaki Makaurau have skyrocketed by 8.5 per cent between November 2022 and October this year.
“In Auckland, you are seeing rent absolutely hockey stick upwards,” says Olsen.
“That’s on the back of higher and higher demand that’s come through quite quickly. We haven’t been able to magic up a whole new bunch of rentals to house those people. You’ve got a lot more people demanding housing, but not necessarily a huge change in supply.”
The country had a net migration gain of 118,900 for the year ended September 2023, the highest on record for an annual period.
While there has been concern about fresh arrivals pulling up house prices, most migrants to Aotearoa rent long before they’re in a position to buy a property. This means that rental prices often experience a faster rise than house prices.
These rental increases will only put further pressure on young Kiwis and families who have already been fighting against inflation over the last 12 months.
Looking at international examples like San Francisco - where housing has become unaffordable for many - Olsen says that rising rents can have some significant domino effects on a city.
“People vote with their feet,” he says.
“We’ve seen outflows from cities where things have become too unaffordable. That’s not the New Zealand I think we want to experience. That’s certainly not the New Zealand I want to live in, where people not only can’t buy a house but perhaps can’t even rent and are having to look further afield and possibly even leave the country. We want Kiwis to stay here, but if we want them to stay, we’ve got to give them somewhere to live.”
The immigration data out this week also provided evidence that the last thing young Kiwis need right now is yet another incentive to leave our shores.
The migration data showed a net migration loss of 44,800 New Zealand citizens for the year ended September 2023 - surpassing the previous record of 44,400 set in the year ended February 2012.
“Unless New Zealand gets on top of this issue, the risk does rise of Kiwis leaving or moving to other areas because of those housing woes. We already have challenges with people who are in severe housing hardship and who are homeless. Those are issues we need to solve and we’re already being challenged on that, let alone the fact that we could have things deteriorate further.”
So what can be done about these rising rents? And is it worrying that the balance of power will swing in favour of landlords under the new Government?
Listen to the full episode of The Front Page for more details on the growing price of having a roof over one’s head.
The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am. It is presented by Damien Venuto, an Auckland-based journalist with a background in business reporting who joined the Herald in 2017.
You can follow the podcast at iHeartRadio, Apple Podcasts, Spotify, or wherever you get your podcasts.
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