Long Term Rental Data (ex ‘The Ministry of Business, Innovation and Employment’)

Great to have access to the New Zealand ‘The Ministry of Business, Innovation and Employment’ (MBIE) private landlords rental prices for all major groupings, pity that the data remains highly aggregated with some areas having very small population and others very large. Being able to create a stratified mean where we could take into account the differences in values so that movement in prices can be seen by value areas would be a major improvement.

However, thanks to the MBIE, we have great statistics back to 1993, which is better than none.

A quick look at long term trends on a national scale shows the downturns in 98/99 and again in 2009, both showed reductions in rental prices. The long term trend is just 4%pa, despite growth getting above 10%pa at times.

A quick look comparing cities in Auckland and Wellington shows that the outer suburbs of Wellington have a different price structure from both Wellington and all major cities of Auckland. This may simply be the impact of pricing by the MBIE driving down private rentals in those markets, because Hutt and Porirua are dominated by MBIE housing. Waitakere rents have not kept pace with the rest of Auckland, dropping close to Porirua average prices.

Listings in Auckland & Wellington tell different stories

The press are salivating about the prospect of continually unceasing prices for homes in Auckland, given that prices are often driven by sentiment rather than facts this may come off, but take a bit of caution. Real data suggests that the sales bubble is driven by investors this time who are now flooding the market with properties for rent and this may have run most of its course.

The number of listings for rent is now 20% higher than in any of the last three years and looking very high. See the chart below, 2013 is the darkest colour and after small seasonal rises last year, listings have remained 20% above previous years since the beginning of January and are not showing signs of easing. However we did hear a lot about rental shortages this time last year.

Conversely in Wellington, sales listings have dropped as well as rental listings, heading towards an apparent shortage of properties for people to move into. Will this result in sales and rental price changes? Will there be a shortage of rental properties shortly? These questions remain just questions as the only sign I have of a reaction to the situation at present is the ease of getting new tenants for one recent vacancy.

The first Wellington chart below is identical to the Auckland one above in content, but the trends are very different. For the first time in three years the number of listings has fallen to a seasonal low below a previous year and is now almost equal to the listings of 2011. The temporary dip during 2011 corresponds to RWC when many landlords took their properties off the market in anticipation of booming rentals during the tournament.

Is there any relationship between rentals and sales listings? If so, then the big change in sales listings in Wellington in the last 6 months , which apparently is accelerating, when combined with reducing rental listings is likely to leave a shortage of properties for people to move to. This last month sees sales listings dropping 10% below those for the last 2 years, trending towards those seen during the RWC dip in 2010/11.

Jonette 2011