We all know rents are falling - but will it last?
Wednesday, 18 February 2026
EXPLAINER: There’s been a sharp step change in the rental market, and recent data shows rents have been falling around the country.
The national average weekly rent was $634 in January, a drop of 2.0% from the same time last year, according to Realestate.co.nz’s latest figures.
Earlier this year the property listings company released data showing that in 2025 the rental market recorded its first year-on-year drop in average rents in a decade.
At the same time, Cotality reported MBIE bonds data showed that over the three months to November the median national rent fell by 1.2% from the same period in 2024, one of the largest declines in the last 30 to 35 years.
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After years of ever-increasing rents, it’s a shift that many rental market participants did not think they would see, but is the current rent trajectory likely to last?
The Post talked to some industry insiders to find out what’s driving the rental market, and what’s likely to happen going forward.
Rents are down on a national basis, but are they really falling everywhere?
Of the 19 areas monitored by Realestate.co.nz, rents were down in 13 of them in January - including Auckland and Wellington which were down 1.8% and 8.9% to $686 and $659 respectively.
Of the main centres, it was Canterbury that bucked the trend, with its rents going up 1.2% to $584.
Realestate.co.nz spokesperson Vanessa Williams said rental markets were behaving very differently across the country, and that in markets where supply had not lifted prices remained resilient.
Property investor and coach Ilse Wolfe works with properties nationwide but has a focus on regional markets. She said rents had been particularly resilient in the satellite towns of regional markets.
“Demand is outstripping supply in places like Bulls, Feilding, Levin, and Waitara, so there is more upward pressure on rents. Whereas in the centres, there’s a higher number of available rentals than normal, and that’s stopping rent growth.”
It was Wellington and Auckland that had the softest rents, while in Christchurch rents had been more stable, despite the influx of townhouses onto the market, she said.
“If tenants want a multi-bed standalone home with some land, there aren’t many of them in the central area, so people either have to pay more or move further out to places like Rangiora.”
So why are rents no longer increasing in many markets?
Cotality’s chief property economist, Kelvin Davidson, said net migration had fallen a long way from its peak, while the stock of available rental listings on the market was still elevated.
“There’s also another constraint on rental growth, given that their level is already high in relation to households’ incomes – at the same time, wage growth has slowed too.”
In the view of Property Brokers general manager of property management David Faulkner, after skyrocketing from 2017 to 2023 rents had ended up several years ahead of themselves, and were now plateauing.
There had been a big increase in the available rental stock, and the reinstatement of interest deductibility and lower interest rates had taken some pressure off landlords, he said.
But in Wellington stock levels reached a record high in January with 965 properties listed for rent, up 54.2% on the same time last year, Realestate.co.nz’s figures show.
Wellington landlord Peter Ambrose said more than 10,000 people had left the capital in recent years, and the overhang of rentals meant tenants had a lot of choice, and rents were competitive.
Will rents continue to fall, or will they pick up again?
Market dynamics had changed, and Ambrose did not see stock levels in Wellington dropping much in the current environment.
“Student numbers are starting to recover, and the economy is picking up at a slow pace, until employment is stronger, and there is a build up of demand we won’t see much rental growth,” he said.
“It will take a while for the excess stock to be absorbed, so rents are likely to be flat for the foreseeable. But at some point supply will go down. There may be some increases later in the 2026 to 2027 year.”
Faulkner said the market overall had actually improved towards the end of last year after a sluggish start, but agreed the flatlining of rents was set to continue.
“I don’t think rents will drop much more, and we might see limited growth in rents for the next two to three years. But until we see a reduction in stock or a much stronger labour market, rents will stay pretty flat.”
The high stock levels also meant it was harder to find tenants with a good credit rating, good income, and a good track record than it used to be, he said.
“We don’t have tenants queueing up at open homes any more. Those days are gone. But it’s a good situation for tenants, despite some claims to the contrary.”
If it’s a tenants’ market, what does that mean for landlords?
Auckland-based tenancy consultant Sarina Gibbon, from Tenancy Advisory Limited, said landlords are working to be competitive in the current market in creative and innovative ways.
In the past, the process of renting out a property was easier and landlords could rely on a supply-demand imbalance in their favour as a price lever to put rents up, she said.
“That’s no longer the case. What has become important is maintaining or improving the quality of a property, offering more attractive tenancy agreements, and ensuring a property presents really well.”
She doesn’t see the situation changing much any time soon.
“A pick up in migration might lead to increased demand, but at this point there is enough surplus stock on the market to accommodate that demand,” she said.
“So unless the economy lifts and younger New Zealanders stop leaving our shores as much, there’s not much room for rents to move up.
“The ability of tenants to absorb price increases here is another factor. Without some wage growth, I don’t think people can afford to pay more in rent anyway.”