by
February 21, 2023
It is not just the January rain that is unprecedented. We have gone from the highest number of rentals ever available in Auckland of 6435 in May last year; to 3,444 today, which matches the 2017 multi-year record low number of properties available!
It is not just the recent flooding which has had an impact, this has been a clear trend since November. We have now 20% lower 1 bd’s than pre-pandemic. 13% less for 2 & 4 bd’s and similar numbers for 3 or 5+ properties.
What has happened to rent levels? They came crashing off over winter as the market was swamped with unsold new builds and low demand, then rents turned in October and surged past the highs of Autumn last year. Check out our benchmark Glenfield 3 bd monthly chart of average rents to see the dramatic swings. This week we saw the lowest number of these properties available since we began keeping records in 2015.
What is going on then? It is hard to be sure, but we can speculate.We think that around a third of the pre-pandemic overseas university students have returned (about 7,000), and this suggests that a similar number will enrol in 2024 and 2025 (over all NZ). This has increased demand, especially for smaller units in the central city. Also, there are clear statistics that very few investors are buying and more are selling up. So supply is shrinking (who would have thought after the governments attacks on landlords?) and demand is increasing. Probably this most important factors behind these changes is the return of overseas students, but new work visa entrants are also a big plus with 16,600 arriving in January, and they all need places to stay.
We are now quite confident that rents will be rising this year, and that they may even take a big jump in early 2024. Inflation is also boosting peoples incomes and this is also allowing both employed and beneficiaries to afford increased rents. The large increase in the minimum wage announced last week is another example of this. Extra demand in Auckland is likely to drive rental level increases, this in turn will help investors to survive the huge interest rate rises until the rental market reaches a new equilibrium level (as well as the inevitable fall in interest rates over time).
