24 Jul 2013

Auckland rent rise lowest in years

11:35 am on 24 July 2013

A new report shows the price of rental properties in Auckland is rising far less than the national average, despite an apparent housing shortage in the city.

Independent economic forecaster Infometrics says rents in Auckland went up 3% in the past year, compared to a 6% rise nationwide.

Managing director Gareth Kiernan says the rise in rental costs is surprisingly low given that other figures point to a housing shortage.

Mr Kiernan says a weak labour market could mean landlords are not putting up rents for fear of losing tenants. He says rental inflation in Auckland is the lowest it has been in three years.

Auckland property investor and analyst Olly Newland says the lack of rental inflation is partly due to the hundreds of small apartments built in the central city in recent years which have flooded the rental market.

Another reason, he says, is that is many renters are becoming first-home buyers as a result of generous lending from banks, and those people leave gaps in the rental market when they move into new homes.

However an Auckland property market analyst says the below-average rise will not last long and rent increases will be up again within the next 12 months.

Olly Newland says and the Reserve Bank's proposed restrictions on low deposit home loans and the greater number of people arriving in New Zealand than leaving will push up Auckland rents.