Regions Rental Listings Compared

Private rental inventory is best viewed as a percentage of total rentals (Active Bonds), i.e. advertised vacant supply as a percentage of total demand. International studies suggest 3% is the balance point where more than that and supply exceeds demand or vice versa. My observation is that this is a little high for NZ, possibly due to the size of Housing NZ in the market. I prefer 2.5% based on anecdotal evidence of shortages by region and surplus by regions in the past.

Based on data from 18th November 2019

Of the major centres, the greatest relative shortage is in Gisborne, followed not too far behind by Hawkes Bay and Manawatu. This is a quick change from a few months ago when Hamilton was in the worst state, but construction is making a difference. Auckland and Canterbury now have similar oversupply.

There is a clear shortage of private rentals for the entire country, about 1,300, not the 150,000 suggested by the ANZ. I suspect their total includes subsidised rentals, eg HNZ.

News reports about Wellington shortage are now becoming common, as is anecdotal evidence as a Wellington investor. Rents are rising well above the equilibrium of 23%of average income, reaching 24% in November 2019.

There is no shortage of rentals in Auckland, only a shortage of income to pay for the rents of private houses with the current levels of the Accommodation Supplement. Auckland keeps showing high vacancies, listings are now 2.9% of active bonds down from 3.1% in July.

Most regions excluding Auckland, have a shortage of private rental homes. Here is a picture of the trend over the last 10 years:

While it is clear that most regions are short of Private rental properties, the balance is debatable, I have picked 2.5%, but this chart shows Auckland has sat around 3% since 2014, almost a full cycle.

To help understand the previous chart, here is the same chart with actual numbers of rental listings (inventory) Auckland being the bigger city has more homes available for rent. Note Trademe changed the rules for property company advertising in 2014, so earlier data is overstated for only some regions (Waikato & BoP) but the trend is likely to be correct.

The minor regions are also available, but do not fit on the above chart, so here they are against the 3% balance point;

North Island first

And the South Island

Jonette 2011