Demand for rental properties plummets

Tuesday, 18 June 2024

Pressure is coming off the rental market, with a significant increase in the number of properties listed for rent on Trade Me.

The real estate website has just released its latest rental data, which showed a strong uptick in rental supply nationwide in May, up 26% from a year earlier.

At the same time, demand for rental properties nationwide fell for the seventh month in a row in May, to be down 30% year-on-year.

The national median rent for properties listed on the site remained unchanged from the previous month at $650 a week.

Trade Me Property sales director Gavin Lloyd said the change in market dynamics, with increasing supply and reducing demand, meant people could expect prices to stay flat for a period.

After a run of record-high rents earlier this year, it looked like some much needed supply was finally being injected back into the rental market, he said.

“That's taking pressure off for those looking for a rental, with more options available.'

Rental demand tended to ease off in winter, but last month’s decrease was compared to the same time last year which indicated the market change was not solely seasonal, he said.

“There are other factors affecting demand. There's been a lot of change in the economy in recent months, and we've recently seen a pretty significant outflow of Kiwi overseas with record high emigration.

“Property prices have also been declining, and there's likely some renters becoming first-home-buyers.”

Household incomes have fallen in real terms with the cost of living pressures, and both public and private sector job cuts were rippling through the economy, he said.

“Moving house is a pretty costly exercise so with less income, more tenants are opting to stay put.”

While the national average rent was stable in May, asking prices increased in some regions last month.

The biggest increase was in Nelson/Tasman where rents were up 4.4% from April to an average of $595 a week.

In Manawatū-Whanganui, Northland and Auckland rents rose by 1.9%, 1.7% and 1.5% respectively in May, but Auckland’s rents were the most expensive in the country at a regional average of $690 a week.

But Lloyd said some regions had actually seen rents fall over the month, with Wellington, Bay of Plenty, Taranaki, and Otago down by 3%,1.4%, 4.4% and 1.6%.

In Wellington, the average weekly asking price for rentals on Trade Me was $650 in May.

Property manager Dante Christensen, from Propertyscouts Wellington, said more listings were coming on to the market, but demand was subdued.

The Wellington region’s rental market was seasonal, with the peak months the summer months, but the drop off was more severe than he had previously seen at this time of year, he said.

“We might get four to five enquiries for a newly listed rental over the first week or two at the moment, whereas in the past you would get that over the first day.”

There were a lot of people putting their own houses on to the rental market, and going overseas, he said.

“The last 10 houses that have come to me for management are in that category.”

While he could only speak about the Wellington market, reports indicated the market was slower around the country, he said.