Rental growth broad-based across New Zealand

15 Apr 2019

Rental inflation at 6.0%pa

Auckland rental inflation slows to 2.5%pa

Gross rental yields rise to 3.61%

Faster rental growth is broad-based across most of the country, mirroring the regional pattern of house price inflation as we hit the tail end of the housing boom.
Falling interest rates mean that, in simple terms, rental yields now look the most attractive they have in four years.
However, landlords face uncertainty around a possible capital gains tax and higher costs due to the government’s Healthy Homes Standards.
These factors are likely to subdue investor interest in purchasing property over the next 12-18 months, suggesting that upward pressure on rents could persist even as the broader housing market softens.

Three-month annual % change

Rental inflation reached an 11-year high of 6.0%pa in March.
The strength of rental price growth is spread across most of the country, with Auckland the only region where rental inflation appears particularly subdued.
Rental growth in Wellington and most provincial areas reflects the strength of population and economic growth over the last couple of years, as well as the fact that the housing boom has taken longer to reach these parts of the country than Auckland and the “halo” areas such as Hamilton and Tauranga.
The oversupply of housing in Greater Christchurch is easing, with rental inflation in Christchurch and Waimakariri reaching its fastest rates in about four years (5.0% and 6.1%pa respectively).
Rents in Kaikōura have dropped 22% over the last year but are still higher than prior to the 2016 earthquake.