September 25, 2017

By: metronz

Record-breaking rents in the capital have topped the $500 median for the first time, with rents around the Wellington region not far behind.

According to January figures from Trade Me, the region's rental shortage has boosted median weekly rents to a new record of $480 a week, up 6.8 per cent on a year ago.

It was being pushed up by demand in Wellington city, where rents had jumped even more, to $520, up from $485 last year.

Head of Trade Me property Nigel Jeffries confirmed Wellington had seen a sharp drop in the number of properties available for rent, with advertisements down 70 per cent from last year on its website.

"A flat in Wellington received almost 100 inquiries within hours of being listed, and 350 inquiries in a week. It's a story that property managers around the capital can probably relate to right now."

Jeffries believed a major factor in the fall of available stock were the higher deposit levels which bank borrowers had to meet to take out a mortgage.

Would-be first-home buyers were staying longer in their rentals.

At the same time, promotional bodies had done a great job in attracting more people, particularly students, into the city.

"It's a double whammy. The supply and stock's constricted to a greater degree than there has been in the past and there's greater demand."

However, he said rental peaks were usually seasonal, and there could be some relief as autumn approached.

Apartments or small houses had the fastest-growing rents in the country with the average rent for an apartment in Wellington city jumping to $470 from $450 in 2016.

Of the 140 rentals listed on Trade Me on Tuesday in the $500 to $600 range for Wellington city there were dozens of one and two bedroom units, flats and apartments in downtown Wellington and surrounding inner city suburbs such as Mt Victoria, Thorndon and Mt Cook.

But a detached house in that range is scarce and getting three or more bedrooms means looking further afield.

Among a handful of standalone dwellings listed was a three-bedroom house in Houghton Bay for $510, a three-bedroom house in Northland for $520, and a four-bedroom house in Tawa for $598.

Nationally, rent rose a more moderate 3.4 per cent higher than they did last January, at a time of year when many people are moving and rents are raised.

"While these figures are pretty modest in the face of spiralling house prices, this level of inflation is far above the level of consumer and wage inflation and is a struggle for those feeling stuck in the rental market," Jeffries said.

Regionally, however, rents fluctuated widely, jumping 12.5 per cent in Hawkes Bay, 11.4 per cent in Waikato, and 8.5 per cent in Northland.

All three regions have enjoyed strong interest from property investors compared to their biggest neighbour, Auckland, which faces higher lending restrictions designed to slow that market down.

Rents in Auckland increased only 4 per cent, suggesting to some economists that renters are unable to pay much more and landlords have been satisfied with capital gains.

Along with Wellington and Northland, another region to break new ground was Manawatu, where median rents hit a new high of $300, up 7.1 per cent.

Not all tenants faced a higher accommodation bill. Rents continued to fall in Gisborne, the West Coast and Canterbury, declining 6.9 per cent, 9.4 per cent and 3.7 per cent respectively.

The appetite for smaller living quarters was also a continuing theme. Rents on urban properties including townhouses and units rose 2.5 per cent to $410, but apartments rose 6 per cent to $445.

Auckland apartments regained some momentum after shooting up early last year, with the median weekly rent at $480, nearly 7 per cent higher than last year.

Wellington apartments also edged higher at $460 , up 4.5 per cent.

Townhouses in both centres peaked at $595 in Auckland, up 7.2 per cent,  and $550 in Wellington, up 14.6 per cent.

 - Stuff

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