Real estate agency & property manager Barfoot & Thompson said yesterday its latest data showed the trend of slower-paced residential rental rises in Auckland continued through the third quarter.
Barfoot’s manages over 16,500 properties in Auckland. Director Kiri Barfoot said the average weekly rent for a 3-bedroom home cost just 3.2% more during the September quarter than it did a year earlier.
“This represents a real cost increase of around $17/week compared to last year. The increase is $2 lower than last quarter and is now the lowest average weekly rent rise that we have observed in well over 2 years.”
The average weekly rent rise for all properties (all bedroom sizes & eligible suburbs) was also lower than the historical norm, up 3.5% year-on-year to $563. This compared to earlier quarterly increases of as much as 4.8%.
Ms Barfoot said central Auckland had the biggest rise due primarily to a growing number of large luxury apartments pulling in higher weekly rents, while demand in West Auckland saw it come in second place with a year-on-year increase just over 5% for the quarter.
The smallest average rises were for homes in Pakuranga & Howick, up 2.2%, and for homes with 5 or more bedrooms, up 2.1%.
Meanwhile, Ms Barfoot said gross rental yields across the city indicated many landlords would be starting to enjoy a rebound in rental returns, despite the slower pace of rent rises: “More than two-thirds of the Auckland suburbs we reviewed this quarter showed an increase in gross yield over the same period last year, with all but a handful sitting above 3% return.
“This follows a period of relatively flat gross yields during 2016 & 2017, and declining yields prior to that, so landlords will be relieved to be making up some lost ground.”
She says this, coupled with low interest rates & a desire to keep properties occupied with good tenants, could be contributing to landlords’ reluctance to raise rents further.
Average weekly rent received in Auckland, Quarter 3 (July-September) 2018 vs same period 2017:
|Number of bedrooms||% change Q217 v Q218|
|% change Q217 v Q218||3.08%||4.01%||3.17%||2.64%||2.11%||3.51%|
Table source: Barfoot & Thompson averages for managed tenancies as at end of each month in quarter. Categories with fewer than 4 tenancies aren’t included.
Based on statistics from about 16,000 Auckland rental properties managed by Barfoot & Thompson. This includes over 6700 3-bedroom properties, which have been chosen as the standard example to provide the best insight into the ‘typical’ weekly rental price in Auckland.
Gross yields: Average annualised rental income divided by median sale price within the same area. Only suburbs with sufficient sales data for the period were reviewed.
Attribution: Agency release.