Barfoot & Thompson director Kiri Barfoot said on Monday Auckland had experienced the slowest rate of residential rent increases in years.
The agency’s quarterly data from the 16,500 rental properties it manages in the region showed rent increases trended down for most property sizes & areas throughout 2018, and this persisted in the final months of the year with the lowest rates of change yet, she said.
The average weekly rent for a “typical” Auckland rental property – the agency’s biggest category, the 6700 3-bedroom properties it manages – rose by just 3.1% from the fourth quarter of 2017 to the fourth quarter of 2018.
“In comparison, the same measurement hovered above 4% throughout 2017. We started 2018 at 3.9% and the increases progressively stepped down each quarter from there.”
Ms Barfoot said that, in real terms, this meant a 3-bedroom home in Auckland cost $564/week to rent in December 2018, around $17/week more than it did in December 2017.
“This slower, more steady rate of change is good news for renters, particularly when compared to the increases of $24/week or more that we’ve seen in recent years.
“What remains to be seen is how the market will accommodate the regulatory changes bedding in now, such as the removal of letting fees, as well as potential future changes to come from the Residential Tenancies Act review.
“While rents are still going up, it is unlikely the current rates of increase are keeping pace with landlords’ rising operating & compliance costs. Nor are we seeing the same level of capital gains which were appeasing many landlord’s calculations. We would expect that, eventually, something will have to give.”
Across all property sizes & areas, the average rate of increase in weekly rents was also at its lowest at 3.3% from the third to fourth quarter, moving up just $4 from the September quarter’s Auckland-wide average to sit at $563.
Only 2-bedroom properties outperformed the norm, increasing by 4.3% across all areas, while the increase for 5-bedroom homes fell to 1.5% in the fourth quarter.
In the eastern suburbs on the isthmus & in West Auckland, average prices for 5-bedroom properties decreased, indicating a softening in demand or potential oversupply for this size of property.
The average cost of renting in central Auckland rose the most of any suburb during the quarter, which Ms Barfoot attributed mainly to the number of large luxury apartments pulling in higher weekly rents.
Average weekly rent received across Auckland:
Quarter 4 (October-December) 2018 vs same period 2017
|% change Q4 2017 to Q4 2018|
|% change Q4 17 v Q4 18||1.91%||4.34%||3.12%||1.70%||1.47%||3.28%|
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.
Attribution: Agency release.