Our 2 Rental Markets

There are two separate rental housing markets New Zealand and the two are quite independent.  

  • The Private rental market with private landlords running a business for profit
  • The Social rental market where social agencies provide subsidised rentals for those who cannot afford market prices

Sometimes these cross over a little, because a social agency may provide the subsidy direct to a for-profit landlord to increase the size of the social market supply.

Supply - Demand balance of Private rentals by region

Auckland is is squeak oversupplied with Private Rentals.  However we are short of 2,700 properties throughout NZ.

Both Auckland & Christchurch are well within a safety margin of supply meeting demand, so I view them as in balance.

My first chart is a simple Supply less Demand chart showing in the main view the oversupply in each region (negative numbers mean a shortage).   It has two parts though, and by clicking on the “Surplus percentage?” words you can see an indication of how important the size of each oversupply is. 

  1. The primary chart shows the actual difference between an assumed 2.5% supply/demand balance (my previous post) is exceeded  or not met by supply   eg Auckland has 147,000 active bonds, so 2.5% of that would be 4,400, but there are 4,700, or approximately 300 properties in excess of balance - my chart shows more precision at 296. (January 2019)
  2. Chart 2 shows the importance of the supply balance, the percentage of Active bonds (or total private rentals) the Surplus represents.  A small percentage, say within ±0.5% is likely to be just the normal variances, but a percentage difference of more than ± % is likely to show an imbalance.  Most are negative, ie in shortage, with the worst being Gisborne, but of the larger centres, Bay of Plenty is showing serious shortages at -1.5%.

So we have a feel for the size of the imbalance, but does this drive higher rents?  It seems intuitive, but the following charts suggest not entirely.

Comparing rents to incomes, we can see that over the last 20 years, rents are relatively stable, not growing as some people believe.  Yes, they grow but at roughly the rate of household income, leaving rents pretty much the same percentage of household income today as they were in 1998.  Despite rents increasing by about 200%, so has income.  Note that HH income is not the same as wages, households may simply have more earners to increase HH income.

Auckland is very quickly declining since a peak in 2015 (hold your mouse over the chart, the data lights up) despite apparently being in balance.  Auckland inventory is rising though - see here

Bay of Plenty is rising however, supporting the point that a shortage may increase prices, but similar shortages in Wellington and Waikato do not support the idea, however anecdotal evidence in Wellington is that rents rose very quickly in late 2018 to now, which will not show through until I have 2019 HH income.  I do not know the current Hamilton market well enough.

Canterbury follows the expected path post earthquake, with a rise in rents due to serious shortages, followed by a sharp fall as the region became overbuilt.  With balance being now met, expect rents to stabilise.


Of course a shortage can be addressed by building more properties, so how many are being built in the major centres?  The answer is that the Private dwelling building boom is evident in all major centres, EVEN AUCKLAND, where Private Supply is slightly ahead of Demand.  (Note from the Act: "a building consent is not required in relation to: (a) a Crown building or Crown building work to which, under section 6, this Act does not apply;” so we have no visibility of Social housing build)

However, this does not show the impact in each region, since each region is of a different size, so I have reproduced the chart showing the same data but divided by the average for each region.  This shows that all regions follow a nearly identical pattern.


The Stats department recently published some detailed estimates of internal migration and the impacts on population in each region in the form of growth by region.  I suspect their data quality is poor, given they are 5-6 years past the census they rely on.  As can be seen the enormous growth in NZ population is not distributed evenly - possibly due to immigrants staying where they arrive, but maybe NZers moving cities to escape crowding.  

This chart suggests that Auckland has almost 10,000 more than the combination of the remaining major centres.  At ~43,000 new residents, Auckland would need at say 4 people per household (no idea of the average of immigrants) 10,000 homes for each of the last 3 years, the figure above suggests.  That would mean there would be a severe shortage of homes, about 13,000, but the Private market is in balance.  I very much doubt the social housing market is 13,000 homes short.

I suspect the correct interpretation is that the quoted population changes are incorrect due to internal migration numbers, we shall have to wait to see the new census.


© Jonette 2011