Renters in Auckland's fringe suburbs have been hit the hardest, new figures from the city's biggest real estate agency show.
Rental growth in the city has been highest in rental accommodation in the southern, western and northern edges of the city, according to a report from Barfoot & Thompson.
READ MORE: Find out if your suburb is rising or falling
But average weekly rents dropped almost 4% in the 12 months to June 2021 in the city's central suburbs.
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Auckland’s average weekly rent ticked over the $600 mark in April and finished the second quarter with a June average of $605, according to data from more than 16,500 rental properties managed by Barfoot & Thompson.
The agency's director Kiri Barfoot says in the report that while the average weekly for the whole of Auckland rose between 2% and 3% in the last year, the pace of growth was more than 4% in the city's outer suburbs.
Two years ago rental growth in Rodney was under 2%, Barfoot says, but now growth is "now well over double that rate", adding that the average weekly rent in South Auckland had risen at a greater rate than any other area in the city - at 4.8%.
The average weekly rent for a three bedroom home in Rodney, South Auckland and West Auckland was between $552 and $585 last month.
The regions "remain the lowest-priced regions of the city", Barfoot says, "behind rural Manukau and Franklin”, where the average weekly rent for a similar property was $491.
The average weekly rent for a three-bedroom home in Auckland Central was a high $1,015, but the report found that the average across all property types in Auckland Central had fallen 3.8% in the last 12 months.
"Only in central Auckland have rents dropped, as inner-city apartments await the return of overseas students," says Samantha Arnold, who heads up property management for the agency.
Arnold told OneRoof that demand for three-bedroom properties was high, with renters now prepared to widen their search to fringe suburbs to secure a home.
Samantha Arnold, Barfoot & Thompson general manager property management, says rents in Tauranga match Auckland but demand is much higher. Photo / Supplied
“One of the gems of Covid is that businesses have eased their thinking on working from home and many people are spending more time at home, which means less driving/less central Auckland traffic.”
As a result, she says, people are finding that they can move out of the eastern suburbs or North Shore to a property further out of the city that provides the same amount of space for a slightly lower rent.
That has led to rents in higher-priced eastern suburbs, and now the North Shore, stabilising.
This shift in demand is not restricted to Auckland. Arnold adds that early indications from the company’s recently opened property management branch in Tauranga show that the region has very similar pricing with Auckland, but with much higher demand than most central suburbs on the isthmus.
“It’s similar to Whangarei, there are hordes and hordes of people at viewings. We’re having to limit viewings to 10 people per viewing and reject quite a few. That’s not what we expected.”
Arnold also says that despite the talk about investors quitting the market after the Government’s changes to tax regulations, the company has not seen a mass exodus of landlords from the nearly 18,000 properties it manages.
“Some people were selling, but they were just reselling to other investors. We haven’t seen a dip in properties available.
“We did expect to see owners putting their hands up to say ‘too much change, this is now too hard’, mixed with the temptation of skyrocketing property prices being a teaser to sell.”
She has seen a gradual switch in demand to apartments and new build properties which renters perceive as better quality, warmer and mould-free. Investors are now looking at those properties to buy.
“I wouldn’t say demand is outstripping supply, but we’re doing a lot more rental appraisals for new builds for investors to take to their bank [for finance applications].
“A lot of investors are hearing the talk about build to rent, we’re starting to manage a few of those smaller properties and others will be coming on-stream in 12 to 18 months.”
Arnold says that with yields on investment properties hovering around 3%, at best 5%, it is still cheaper to rent around Auckland, so she expects tenants to be keen on securing homes in purpose-built rental blocks.
“We’re surveying our tenants about what they’re looking at so we can advise developers what to offer in purpose-built build-to-rent buildings.”
Only in central Auckland have rents dropped (by 4%) as inner-city apartments await the return of overseas students.
