Rental prices in New Zealand have grown well over the past few years, however this growth has slowed through this years winter months. The median rental price grew from $330 in January this year to $340 in May, but fell in July to $320. Not all areas around New Zealand saw rental price falls and while this may a temporary event, the supply of property available to let would suggest otherwise.
The graph below shows the number of properties promoted for rent on a national website. The average number of lettings over the last 31/2 years shows a trend of rental properties available to let increasing over the winter moths and Christmas period.
Results for this year show the number of lettings being close to the average for the first four months of the year, but then moving away from the average over the winter months. The number of properties available to rent in 2012 is now 7.2% above the average over the past 3 years. This increase in supply appears to be the reason behind a stalling of rental price growth.
It is unclear exactly what is behind this move, however the Real Estate Institute says that their members have indicated that a lot of people are moving to Australia for work and younger people are moving back to their parents properties in order to save on rental costs.
Not all areas are affected by this trend however. The table below shows that the number of properties to let in Christchurch, most of Auckland and Hamilton are down on average. Although Hamilton rental price growth has been slow, Christchurch and Auckland have led the countries rental price growth over the last year.
It may be a good idea to investigate the supply of rental property in your area if you are contemplating rental price increases. Many Property Investor Associations around the country include a “state of the rental market” section in their monthly meetings which is an excellent way to gauge the mood of the market.