Looking into the figures, it's obvious that Wellington rents are cyclical. There can be a 10 per cent variance in value based purely on the time of the year the bond is lodged.
The highest values are recorded in February, March, April and December and the lowest from July to October. It's therefore important to compare like with like and not measure month-on-month change — because that can be variable and not reflective of the overall situation.
Wellington City has had an increase of 8.1 per cent in rental rates up to the end of December 2017. This is the strongest increase in the capital since the middle of 2009 and higher than Auckland has experienced at any time in the past 14 years.
Rental shortage may continue to grow in the coming months as we head into the busiest months of the year for new tenancies.
Despite some commentary to the contrary, rents typically track income levels, not the cost of rental properties. This is because rents can only go up as much as people can pay.
The focus then turns to the limited number of rental properties available in the capital and this is definitely an issue, driven by the total number of dwellings in the city as well as total number of properties available for rent.
Building new dwellings is an important focus for all councils as they deal with an increasing population, but more recently the debate has turned to why there's no rental stock.
With increased regulations on the quality of rental properties from the new Government, investors are understandably questioning the attractiveness of property investment and debating the potential outcome that could have on rental property stocks.
(If investors choose to exit the game, the number of available rentals could decline further.) We haven't yet seen a flood of investors listing their properties for sale. Maybe that is yet to come.
The strong recent growth in property values has also had an indirect influence on the rental market.
The rental pipeline isn't flushing out those long-term renters who would have traditionally gone on to buy their first home. As they struggle to raise a deposit and satisfy bank conditions, they're not releasing stock back to the rental market.
So we've got a three-fold problem to solve: not enough properties being built, owning rental property becoming less profitable and potential first-home buyers taking longer to exit the rental market.
While the number of new initiatives being mooted and implemented by various think-tanks and policymakers is encouraging, when you focus on the data behind the problems, you can't help but feel that it's not enough.
Perhaps it'll take something like a comprehensive capital gains tax to shake things up.
