Rents on new tenancies are up by 6% (in the year to February) – the seventh consecutive month growth has been in the 6-7% range.

The 6% growth in rents on new tenancies is at least double the long-term average of approximately 3%, per Statistics New Zealand.

Three factors are adding pressure to an already hot rental market.

  1. Rising wages: The minimum wage has far outstripped the Consumer Price Index (CPI) for years now. Between 2016 and 2023, the minimum wage increased at nearly twice the rate of inflation, with a 48.8% increase in the minimum wage and a 25.1% increase in CPI. The adult minimum wage will receive another boost next month, increasing by 2% to $23.15 an hour from 1 April.
  2. High net migration: February figures show a 12-month net migration total of 133,836. Though lower than seen previously, net new inflows of people remain high and may even increase.
  3. Limited supply of rental stock: Trade Me figures (October 2023) recorded a 21% lift in demand for Auckland rental properties. However, supply of rentals advertised for rent was down by 10% annually.

According to Trade Me’s latest Rental Price Index (to January 2024), the national median weekly rent is now $630.

Landlords passing on borrowing costs

Gavin Lloyd, Trade Me’s property sales director, suggested landlords were passing borrowing costs on to tenants.

“As borrowing costs rise, landlords may face increased expenses, and some could pass on these costs to tenants through higher rents. This change might make it a bit tougher for renters with the rising cost of living and lack of properties available giving them fewer options when searching for a property,” Lloyd said.

Auckland rents reach new high

Average median rent in Auckland rose by 3% (from January to February), reaching a high of $680 per week. Landlords on the North Shore City have made the biggest gains, with rent increasing by 4.2% to $720 a week.

“As people in New Zealand got back to their normal routines in January, the cost of renting a place followed similar patterns to the previous year. This is largely driven by the supply of properties not keeping up with demand. In January we saw demand increase by 61% in Auckland compared to December – which will be contributing to higher rental prices,” he said.

Trade Me data also revealed new records for apartments and townhouses. The median weekly rent for an apartment peaked at $560 per week in January, with townhouses reaching $665 per week.

Post holiday demand spike

The number of rental properties on the market jumped by 15% from December 2023 to January end. Wellington registered the biggest increase – a whopping 38%.

“Coming into 2024, a lot of Kiwi are searching for a new rental property – this is especially evident in Wellington, which saw an increase in demand by 94%. Southland and Auckland also saw a surge in demand; this could be due to people wanting a change of scenery in the new year,” Lloyd said.

Landlords are commanding great rents. But your property needs to tick many boxes to capture top dollar. Call 0800 GOODWINS to learn how you can maximise rental yield in the current market.