The rental market in New Zealand has been weak for some time now.
Slow migration and a housing glut are driving rent cuts in parts of the country. (Fiona Goodall pic)
ANALYSIS: The recent fall in rental prices in some parts of the country shouldn’t be too surprising for a couple of reasons.
First, house prices nationwide have fallen in five of the past six months. There are plenty of sellers, but not as many buyers, with the supply situation partly reflecting the spike in new-build homes immediately following the pandemic – especially in Auckland. Those unsold townhouses will eventually find owners, but perhaps not this year.
Second, population growth is slowing, with annual net migration dropping from a peak of 135,000 in October 2023 to just 13,000 in July this year. The average annual gain over the past 10 years has been 50,000, so things are much weaker than normal.
My monthly surveys of residential property investors, conducted in conjunction with Crockers Property Management, have shown weakness in the tenancy market for quite some time. This can be best seen in the net proportion of landlords saying it is easy to find a good tenant.
In April last year, a net 25% said things were easy; landlords could pick and choose. Three months later, a net 12% said things were hard. In November, the reading was -21% and it reached a record -41% in July and August of this year. The latest reading is -36%, which I interpret more as things not getting worse rather than a new improving trend appearing.