October 23, 2024 By: oaksproperty_hzp288
How is the rental market faring?
- Unabated inflation
- Skyrocketing expenses
- Pricey cost of living
- High interest rates
These are some of the issues New Zealanders have been increasingly facing in the last few years. In addition, rents have consistently increased, and tenants are grasping at straws.
While rents around New Zealand have increased, maybe at a different rate, one must understand that being a tenant comes with uncertainties. You may be asked to leave anytime and may never feel fully settled.
Amidst this unpredictability, a constant increase in rent surely pinches, often causing financial strain and emotional stress for tenants.
Kelvin Davidson, chief economist at property research firm Corelogic, says average rent has reached a record high. Yet, it doesn’t show the full extent of its impact on a tenant. He adds that you may pay an average rent, but you may not have an average income, so it takes up a much higher share of your budget.
Meanwhile, a recent OECD report has pegged New Zealand among the world’s most expensive places to rent. The report says more than 25 percent of a family’s disposable income is spent on rent, placing New Zealand ninth among other countries.
There are more concerning stats in the offing — we are one of only eight in which median housing costs used up more than 40 percent of disposable income for the lowest-income tenants. And here’s more data sourced from Tenancy Services showing that the median rent has risen from $200 a week to $550 a week between April
2002 and April 2022, an average increase of 5.19% per year.
Despite such a spike and volatility in the rental market, a recent report by Deloitte shows that home ownership in New Zealand has significantly dropped to almost below 60 percent. The report adds that it is now at its lowest rate in nearly 80 years.
What does all this mean?
Should the government seriously consider implementing rental control? Or will the high rents slowly taper down, like all market trends? Experts think so.
BNZ chief economist Mike Jones believes a slowdown in rental rates is approaching. He says rents are likely to flatten and fall a bit.
More homes will become available as more first-time owners move into their new homes and many New Zealanders leave the country for greener pastures. New and more listings are likely as new builds become ready for occupancy. Such factors and the oversupply of homes in some areas could bring down demand and rents. This will not happen overnight, and tenants may have to play the waiting game.
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