The cost of renting a three-bed home in Auckland went up by more than $20 a week (3.9 per cent) in the year to March according to realtor and property management firm Barfoot & Thompson. The current rate of inflation is 1.1 per cent and average pre-tax wages rose 4 per cent, during the same period says the Reserve Bank.
While in real terms this means the average rent for a three-bed home has gone up less than it has in the past, it is, says Kiri Barfoot,a notable turning point after the peaks of 2016 and a steady 2017. In 2016 rents rose by 4.3 per cent and in 2016 by almost 5 per cent.
“Despite rising operating and compliance costs, these figures indicate that landlords are choosing not to raise rents by as much as they may have in the past,” says Barfoot, the firm’s director.
“What remains to be seen is how other pending regulatory changes may affect landlords’ costs, and how they will accommodate these.”
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These changes include the compulsory installation of ceiling and underfloor insulation by mid 2019. Barfoot is not seeing a mass exodus of landlords from the market.
“Auckland needs more great landlords and now is a great time to purchase a rental property,” she says. “While operating costs are going up, rental yields are now holding their ground in relation to house prices.”
Three-bed properties, which make up around 40 per cent of Barfoot & Thompson’s managed properties, are used as a measure of the market.
The outlier was one-bed properties with an increase of 5.3 per cent year-on-year to March. Prices for rentals of any size were most under pressure in the central suburbs and West Auckland, up 5.7 per cent, and rose the least in Pakuranga and Howick, at just 2.2 per cent.
The length of time tenants are staying in rentals managed by the firm is increasing with the average length of stay having increased to 25.5 months from 23.3 months.
