Increasing demand for rental properties but stock struggling to keep up

Mr. Clancy said we often see a lag between an increase in demand and rising rents which means it’s likely that landlords will lift rents if the demand continues to outstrip supply.

Rising demand for rental properties across the country is making it tough for tenants and stock is struggling to keep up, according to the latest Trade Me Rental Price Index.

Head of Trade Me Rentals Aaron Clancy said they'd seen a 20 percent increase in the number of inquiries on rentals nationwide in June while the national median rent remained at its all-time high of $500 per week for a third consecutive month. "We're seeing an increasing interest for rentals but stock simply isn't keeping up with the number of properties available for rent in June down 7 percent on last year."

"With rising house prices, some Kiwis are staying in the rental market longer than before to save for a house deposit. Also, with growing rents, some tenants are staying put rather than look for a new rental in this tighter market. Unfortunately for anyone looking for a rental property, this is a perfect storm and as a result, we're seeing record rents, increased competition for properties and less stock."

"The regions which are experiencing the largest increases in demand are Bay of Plenty with the number of inquiries up a "staggering" 47 percent on last year. Inquiries in Southland had also jumped 45 percent along with Manawatu/ Whanganui which rose 33 percent and Canterbury up 32 percent."

Mr. Clancy said we often see a lag between an increase in demand and rising rents which means it's likely that landlords will lift rents if the demand continues to outstrip supply.

"With such high demand, rents have increased in many regions across New Zealand. In June, five regions saw strong double-digit growth and four reached new record rents. If demand continues like this we expect to see a lot more record rents over the coming months."

Mr. Clancy said Southland saw the biggest annual rent increase, rising 15.4 percent to a record $300 per week. Otago (up 13.9 percent to $450), Nelson/Tasman (up 11.4 percent to $440) and Waikato (up 10 percent to $440) also reached record median weekly rents in June.

Wellington rents rise $60 per week

"Renting in Wellington continues to get more expensive with the median weekly rent rising $60 per week on last year to $540 in June.

"Taking a closer look at the region, Wellington City has the highest median weekly rent at $575 after climbing 15 percent on last year from $500. Rents in Porirua rose 3.8 percent year-on-year to $545 per week along with Upper Hutt which jumped 11 percent to $500 per week. The median weekly rent in Lower Hutt was $495 in June, up 6.5 percent on last year."

Mr. Clancy said while demand for rentals in the region eased, up just 2 percent on last year, the number of rental properties onsite dipped 11 percent. "With less stock on the market and rising rents, tenants in the capital are having to dig deeper into their pockets.

"The little suburb of Waiwhetu in Lower Hutt had Wellington's most popular rental in June. A property on Bell Road had 76 inquiries in the first two days onsite."

Demand for Auckland rentals rise

"While the median weekly rent in Auckland has been flat since the start of the year, the number of inquiries on rental properties in the Super City rose a solid 21 percent on last June."

Mr. Clancy said with demand rising, we think tenants in Auckland could see some large rent rises on the horizon.

"Auckland had the most popular rental property in the country in June. A three-bedroom house for rent in Mount Eden had 99 inquiries in the first two days onsite."

Mr. Clancy said Auckland's median weekly rent was $560 in June, up just 1.8 percent on the year prior while the number of properties available to rent in the region was down 2.7 percent.

"The areas with the highest median weekly rents in June were North Shore City, Auckland City, and Rodney." North Shore City's median weekly hit $600 in June, up 3.4 percent year-on-year. While Auckland City was $565, up 2.7 percent and Rodney up 2.8 percent on last year to $555.

Demand for houses soars 62 percent "When we look at demand by property type, houses have seen a huge increase in the number of inquiries, rising 62 percent on last year.

Mr. Clancy said the median weekly rent across all house sizes increased year-on-year and rents for large houses (5+ bedrooms) saw the largest jump of 10.7 percent year-on-year to $830.

"Rents for large houses (5+ bedrooms) in Wellington rose significantly in June, up 25.8 percent on last year to $950 per week.

Apartments in hot demand

Mr. Clancy said the median weekly rent increased across all urban property types compared to June 2018 but apartments were the hot favorite.

"Demand for apartments, townhouses and units increased in June. Units saw the largest jump with the number of inquiries nationwide increasing 19 percent in June. Apartments saw the number of inquiries jump 14 percent while townhouses saw a 6 percent bump in inquiries.

"The largest rent increase for urban properties was apartments in Wellington which rose almost 10 percent to $515 in June.