Rental increases subduing in Auckland
A new Infometrics report is out, and in what will be music to the ears of renters (but not sound so sweet to landlords), Auckland’s rental market is slowing down.
Back in July, Auckland’s rental increases were the highest they had been in two decades, at 44%. Since then they’ve eased off, with rental inflation in the city standing at 3.3%. Falling optimism in the market, resulting in cautious landlords, is believed to be the reason for the brakes being put on the city’s rental market.
Meanwhile over on the other side of the country, rents are dropping in Christchurch (a 6% decrease). Kāikoura's rental market is experiencing a lot of changes, however it’s predicted that it would settle down in 2018. Gareth Kiernan, the chief forecaster for Infometrics, said by mid 2018 the Kāikoura market was expected to stabilise. "By the end of 2019 we could expect to see a reversal in inflation," said Gareth.
In Wellington rents increased by 3.7%, which is currently the fastest rise in the country. Construction costs also rose, by 3.2%. Construction costs are highest in Auckland though, with a 6.8% increase.
But renters can’t celebrate too jubilantly—rental inflation across New Zealand still remains higher than the overall inflation rate. Rents are generally rising faster than ever before. They rose 2.2% in the year, with a 0.6% increase in the September 2017 quarter according to Statistics New Zealand.
And a report released earlier this month from Statistics New Zealand also doesn’t paint a rosy picture for renters. The report found that one in eight households spend over 40% of their income on housing, with one in five of these households being renters.
With the general definition of ‘rent burden’ applied to situations in which the renter uses more than 30% of their wage to cover their housing, this figure is cause for concern.