Rents in 2015 end the year where they started

While property prices rose around the country in 2015, particularly in Auckland, rents didn’t keep pace according to Trade Me Property’s latest rental figures. Head of Trade Me Property Nigel Jeffries said that median asking rent across the country ended the year almost exactly where it began in January, at $420. "While we expect there will be a rental adjustment this month as more properties come onto the market in the New Year, it’s not going to keep pace with the explosive for sale market. "There was a rent adjustment in January 2015 of about 5 per cent on the previous month, which added $20 a week to the average weekly rent paid by tenants. We’d expect to see a similar jump this year." Rents no help to Auckland investors The median asking rent in Auckland saw minor fluctuations throughout 2015, cracking $500 for the first time ever in November but settling at $495 in December. "Overall, it was a good year for tenants with median asking rent starting the year at $480 and finishing at $495 after briefly cracking $500 in November. We expect to see the median weekly rents tick above $500 early in 2016 and stay there, but it certainly won’t be a significant increase like we’ve been seeing in the for sale market," Mr Jeffries said. "Clearly investors in Auckland are hoping for long-term capital gains from their properties, but in the short term the rent from their investment is a drop in the bucket on a significant Auckland mortgage." Outside of the City of Sails the typical median asking rent ended 2015 almost exactly where it began in January at $370 a week, rising in March to peak at $380 before falling to the current level. The current figure is a 5.7 per cent rise on December 2014 and represents a $20 rise in median asking rent over the past 12 months. The 5 year trend Mr Jeffries said median asking rents over the year remained "fairly static" when compared to recent years. "When looking at New Zealand’s median asking rent trend over the last five years, the rental market has clearly plateaued over the last 12 months. The period between 2011 and 2012 saw a similarly flat rental market before 2013, and 2014 saw a rapid increase in rent costs. "Overall, the five year period for median weekly rent across the country increased by 23.5 per cent, from $340 a week to $420," he said. In the Auckland market the five year period saw a similar rise of 26.9 per cent, taking rents from $390 a week to $495. "The pace of rental increase is very modest compared to the rise in asking prices of properties for sale over the same period, which topped 60 per cent," he said. Christchurch market continues to weaken While the rest of the country experienced subdued weekly rent changes, the Christchurch market continued to weaken considerably as it adjusted following the Canterbury earthquakes and the city’s rebuild. "Christchurch began 2015 with an average weekly rent of $450 but fell to end the year at $420. Compared to 2014, median weekly rents are down 6.7 per cent in the Garden City and we’re not seeing any signs of a halt at this point," Mr Jeffries said. Christchurch’s five year trend shows the steepest increases in median weekly rents the city has seen since 2010 and the significant adjustments in the last 12 months. "The current median asking rent takes the market back to match the same period two years ago. However Christchurch’s five year growth still represents the largest growth of any of the three main centres and any other region of the country." Ups, downs and plateaus in the regions The Bay of Plenty continued its strong growth in median asking rent with an 8.8 per cent rise over the past 12 months, settling at $370 and adding over $1,500 to the annual cost of renting a property in the region. There were nine regions with an increase in weekly rent, most of which were in the North Island while the three regions with decreases in rents were all in the South Island. The largest rise was seen in Manawatu/Wanganui, up 21.7 per cent year-on-year in median asking rent to a new high of $280. This comes after a sustained period over the past five years during which rents hovered around $250 a week. "The key factor in the growth of median weekly rents in this region is supply and demand. Listing numbers in the region are down 20 per cent compared to 2014," Mr Jeffries said. Strength in rents for smaller houses Outside of the Auckland market, small houses of 1-2 bedrooms are driving the market. Excluding Auckland, the median asking rent for these properties rose by 2.7% over the past 12 months. In the main centres the rises were more significant with a 6.3 per cent rise in Wellington, while Christchurch saw a small rise in median asking rents with smaller houses up 2.9 per cent over the past 12 months. Units in strong demand Mr Jeffries said that units have recently become a very popular rental option. "Across the country, units saw median asking rents rise 6.3 per cent to $340 a week, adding $20 a week compared to December last year. The demand for units in Auckland is now only slightly behind the growth in the burgeoning apartment sector. "Apartments in Auckland shot up from $410 a week at the end of 2014 to peak at $460 in August, before easing back to the current level of $450 a week in December."