The Massey University Residential Market Report, which tracks mean rents and rental bond numbers, shows a steady increase in the number of people renting, coupled with a decrease in vacancy rates, over the past decade.
Report co-author, Associate Professor Graham Squires, says these changes are due to the combination of an increasing population and a decrease in home ownership.
“The long-term trend shows fewer first-time homebuyers as deposit values rise out of reach, which means many are renting for longer.”
There are also clear signs that rental markets have tightened over the past five years across New Zealand. The number of new bonds lodged shows the tenancy turnover rate for rental properties is on a steady downward trend.
“One of the first signs of a tighter rental market is a decreased vacancy rate, followed by rent increases,” Dr Squires says. “Renters tend to stay longer when it is difficult to find alternative accommodation, and families generally prefer to stay put if their children are settled at school.
“A tight rental market also makes it difficult for people to move to new job opportunities, particularly in Auckland and Queenstown where rents are relatively high.”
Rents have increased steadily over the past five years across the board, with the average national rent increasing by 25.5 per cent over that time. Some of the largest increases have come outside of the main centres, particularly in the tourist areas of the South Island.
There have also been significant increases in rent over the past 12 months.
“The national mean rent increased to $411 per week from May 2017 to May 2018, which is a new high and represents an annual rate of increase of over four per cent,” Dr Squires says. “Overall, rents continue to track above the rate of inflation.”
He says these trends are unlikely to change in the immediate future.
“The outlook is for a tightening rental market both in terms of demand, due to population increase, and supply, due to constraints in the number of rental properties available,” he says.
“This is despite the appeal of property investment in New Zealand. While property investors add to rental stock, they can also increase housing affordability problems, leading to would-be homebuyers renting for longer.”