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National deterioration in rental affordability both quarterly and annually
Massey University’s latest Rental Report shows a national deterioration in rental affordability both quarterly (1.76 per cent Index Deterioration March 2021 – June 2021) and annually (9.4 per cent Rental Charge Deterioration June 2020 - June 2021).
The report also shows a decline in rental affordability in seven of the 16 regions from last quarter, with Southland and the West Coast of the South Island bucking the trend.
Regionally, between March 2021 and June 2021, seven regions are deemed less affordable than the national average which is set at 100 per cent.
- Bay of Plenty – 113.3 per cent
- Tasman – 113.1 per cent
- Hawke’s Bay – 110.5 per cent
- Northland – 106.3 per cent
- Auckland – 103.3 per cent
- Nelson – 102.2 per cent
- Gisborne – 100.9 per cent
The largest annual rent increases were recorded in five regions:
- Hawke’s Bay – 20.4 per cent
- Bay of Plenty – 16.4 per cent
- Manawatū-Whanganui – 14.2 per cent
- Northland – 12.8 per cent
- Gisborne – 11 per cent
Wellington and Auckland showed a moderate increase of 7.8 per cent and 3.4 per cent respectively for the year.
Report authors, Dr Arshad Javed and Professor Graham Squires from the Massey University Real Estate Analysis Unit, say there are a number of varied factors impacting rental prices across New Zealand.
“These include rising house prices that feed through the housing system towards renters, a shortage of properties, and rising costs for landlords given recent policy changes,” Professor Squires says.
The remaining nine regions are all relatively more rent affordable than the national average, but two regions continue to stand out as being the most affordable for renters – Southland (73.5 per cent) and West Coast (65.7 per cent).
“West Coast and Southland continue to have affordability below the national average, reflecting more favourable rental conditions in these regions relative to incomes,” Dr Javed says.
“Despite the West Coast being one of the most affordable places for renters, the region has had the largest quarterly increase in rent prices – up 12 per cent to an average rent of $281 per week. This still pales in comparison of course to Auckland and Wellington - the most expensive cities to rent accommodation, at an average of $554 and $510 per week respectively,” Dr Javed adds.
National and regional affordability are calculated by dividing the respective average weekly wages into the respective geometric mean rents.
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Rising house prices and increase in interest rate lead to decline in home affordability
Rising house prices and decreasing income lead to decline in home affordability
Created: 13/12/2021 | Last updated: 13/12/2021
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