12 Mar 2020

New Zealand rental price rises outstrip inflation by 2 percent

8:46 am on 12 March 2020

Rental accommodation is more expensive than it has ever been before, with the national average rent reaching $480 per week last month, according to the Ministry of Business, Innovation and Employment data.

14588891 - rental agreement form with signing hand and keys and pen

Photo: 123RF

That's $20 a week more than the same time last year and $40 higher than the year before that.

The rise has been blamed on a lack of available housing, as well as landlords passing the cost of the Healthy Homes Standards on to renters.

The Property Investors' Federation said statistics showed that over the past year, rents increased nationally by an average of 3.9 percent - 2 percent higher than inflation.

Dunedin was hardest hit with an average increase of just under 13 percent; followed by Palmerston North - where the average rose nearly 11 percent.

Federation president Sharon Cullwick said the recently introduced Healthy Homes Standards were partly to blame.

She said landlords were compelled to upgrade their homes but it was the renters who had to pay for it.

"If you think, most houses, if they don't have adequate heating, [they] will have to put in heat pumps," she said.

"So that's a cost of, the cheapest ones probably $1500-$2000, to put in a heat pump.

"So of course that's going to go back on the tenants which means that rents will increase. And we know that a lot of tenants can't actually afford to put on the heating."

Breaking the back of the current system

Ultimately however, Cullwick said the increase was due to a shortage of housing supply.

Advocacy group Renters United member Robert Whitaker said the government needed to take the housing crisis seriously "and actually start building a lot more housing at all levels of the market".

"Also we need to put things in place to control the private market as well - so an example of that would be rents could be tied to inflation."

Part of the problem in Wellington was the annual cycle of people searching for places, partly caused by the return of students which drove rents up, he said.

"The back of that needs to be broken," he said.

"We need to spread out when tenancies expire, and we need tenants to be able to choose when to move on rather than have these one-year tenancies that all expire at the same time.

"It just creates a massive churn in the market that benefits landlords."

'Stressful' finding a place to live: new renter

Wellington has the highest rent prices in the country - where the average weekly rate last December was $600, well above the national average.

It took single mother Jessie Moss three months to find a suitable home to rent for herself and her two children in the city.

"I didn't want them to know that we were moving house, until something was certain. And I didn't want them to be drawn into the stress.

"I didn't want them to see me on TradeMe every night, I didn't want them to know I was constantly writing applications and emails. So trying to keep that low key for your children is really difficult."

She said the days and months searching for houses were stressful.

"Not much available, and what is available is either far too expensive, or really really poor quality, or both'," she said.

"You kind of start to lose faith because you start to think 'well, maybe there just isn't something.

"Like maybe I really have to rethink what I'm doing here, do I have to get together a whole bunch of friends and buy a house we can all live in and squash in? Do I have to quit my job?

"It's that bad - I sort of was starting to think maybe I really have to go completely back to the drawing board and rethink this entirely."

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