Why Statistics for Renting Properties?

The Blog

I am passionate about investing based on great knowledge of the market and trying to avoid emotion in my decisions. I analyse data from my own collection from Trademe (10 years of data) as well as public data from Stats, MBIE and the Reserve Bank, all of whom publish data but do little with it. Hopefully my analyses have turned the data into information to assist you.

We have managed to grow, profit and become independent from a small portfolio within a decade based on great research into:

  • Rental prices - to ensure we meet the market based on the what the tenant can see.
  • Incomes - recognising that prices can rise as incomes rise is useful for forecasting
  • Market conditions - identifying premium rental areas for yield before purchase
  • Supply vs Demand ratios drive prices and choice of tenant and analysis identifies how well matched they are

I have specialised in Statistical analysis throughout my career, and now as a retired person have decided to publish most of the information I create to assist others to reach independence.

The data is based on analyses I work for my own purposes. If you are frustrated that I have not updated anything - ask me to update, the site is not busy so I only update it infrequently;

I usually post on facebook sometime after I update the blog , so you can follow me on Jonette if you want, but if you register for a free subscription you will get a Mailchimp notice earlier.

This is what I mean by simple data - ie not much use because while you can see growth occurring, there is no information about where or why or how seasonal or the rate of change:

I turn this sort of data into information.

Market Information

These charts are my go-to for understanding the NZ market. The first shows how much change is occurring on a year by year basis. The week by week analysis for each region is in the dropdown “MARKET”. I believe the market is in balance when there are about 2.5-3% of rental properties being advertised - see this page for the long term trend. However, NZ rental market was disrupted by the Christchurch earthquake when many fled Christchurch fo other centres, and investors responded with more properties. The rebuild was quick and overdone, so Christchurch went into glut and rentals dived while Auckland investors jumped in, keeping that market in balance - the rest of the country took the net immigrant growth leading to shortages almost everywhere.

The following charts use automatic downloading of data from the MBIE website, meaning they are always up to date:

Prices, indexed to January 1993

Here is the same data in an indexed form, to show relative growth since 1993, which helps to identify regions that are behind or ahead in growth of rental prices.

Demand, ie New Bonds

There are now 4-5 times the number of Active bonds (rental dwellings) compared to 1993, ie 4-5 times as many rental properties - depending on region. Lodged bonds represent turnover, ie a bond is lodged only when signing a new tenant. The number of lodged bonds has not changed since 2006, suggesting that while there is growth in the number of Active bonds, turnover has slowed, most likely due to tenants staying longer.

Market Forces

The interdependence of Trademe, Rents and Household Incomes. The similarity of the curves in the grey background shows the quality of the free market for rentals since Trademe started dominating advertising in about 2007. Prior to 2007, the match was poor since it was based on poor feedback loops via newspaper advertising - landlords could not easily check other similar rentals before setting the price.

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Jonette 2011