Good day,

Just a quick update on the wider rental market in New Zealand and its impact on the apartment rental scene.

It seems that some property developers, facing challenges or a lack of success in selling properties in the current market, are opting to rent them out instead. This influx of properties has led to a shift in the rental market, now favouring tenants with a greater number of listings available and asking rents becoming more competitive.

The number of rental listings on Trade Me has seen a significant increase, being 31 percent higher compared to May of last year, which itself was 41 percent higher than the previous year.

BNZ Chief Economist Mike Jones noted that every region across the country has experienced a double-digit percentage rise in rental listings this year. Consequently, vacancy rates have also risen, particularly in Auckland and Wellington, and the national average rent has decreased by $14 per week.

In our view, several factors contribute to this increase in listings:

• Many owners are choosing to rent out their properties rather than selling in a subdued market, thus increasing the supply.
• Some short-term rentals are now being offered for longer-term leases.
• Young adults are staying with their parents longer due to the high cost of living, or are choosing to move overseas.
• The rapid pace of new housing construction in New Zealand. Completion data from Auckland Council indicates approximately 1450 new homes are being finished each month.

The CBD apartment market is beginning to show signs of softening, with the number of listings reaching 700. Interestingly, the number of viewing inquiries has not declined, especially for properties that are in excellent internal condition. However, with more options to choose from, renters now take their time before committing to a preferred property.

Therefore, it’s worth noting that ensuring your property is well-maintained with a fresh coat of paint, possibly new carpet and furniture can help achieve a good rental income and reduce potential vacancy periods.

As always, yours

Ali Karambayev