Average Rents Hit Another Record High | Ep. 203

In this episode, we discuss how median rents in New Zealand hit a record high in February 2020. In that month the median rent hit $520 per week, up from $495 the year before. 

That equates to a 5.1% increase over 12 months, compared to general inflation of 1.6%. That means that rents are increasing at a faster rate than all other goods. That's bad news for tenants as more of their income will then be going towards rent.

Our conclusion is that a large part of this increase is due to the additional regulation that has been levied on landlords. Rental property owners are likely to be 'pricing in' the additional costs and risks of having tenants. These include: higher costs from the Healthy Homes Act, lower revenue through the ring-fencing legislation, and the requirement for landlords to pay a letting fee, rather than the cost be passed on to tenants.

These additional costs are naturally passed on to tenants. 

Another interesting finding in the podcast is in the dynamics of demand and supply. There are multiple regions highlighted where the demand for rental properties decreased, the supply of rentals increased and yet the average price increased. 

This is because of the relative price sensitivity of both landlords and tenants i.e. demand and supply move in different ways and different factors will play differently. 

We also mention the property investment webinar that we are holding on Tuesday 7th April at 5 pm. We are going to open up and share our analysis of over 165,000 data points to see which areas of New Zealand are most likely to be hardest hit through Coronavirus, and which are most likely to recover the most speedily.