Wellington Rental numbers 3-year slump

Investment property numbers in NZ grow on a straight line, however a small dip is now evident. Researching the cause of this dip shows that most of the loss of rental properties comes from the two earthquake impacts on Wellington, and a little from the earthquake effects on Christchurch.

Plotting “Active Bonds” - more simply termed "total rental households” for regions shows some surprising trends. The National total correlates to a surprising straight line rising by very close to 1000 households per month. Interpreting that, NZ has an increase of 1000 homes becoming rental properties every month.

The rate of increase slowed a lot over 2018/19, with closer to 500 per month now being the normal growth.

The Active Bonds chart below shows National and Auckland bonds against straight lines with correlation of .9989 and .9992 respectively.

So Nationally we are not keeping up with likely demand. But it is not Auckland that is short!

Canterbury and Wellington also have great correlation if plotted up to the date of the Canterbury Earthquake, Feb 2011, 0.9982 for both.

Wellington Rental Supply Constraint

Take a look at the green and red lines near the bottom, I have expanded the scales below.

As you would expect, Canterbury lost a lot of people because of the quake, so the line changed position, rather than slope, with a hiatus from Feb 2011 to Feb 2014, supply is now matching demand. See chart below.

Wellington on the other hand experienced a second earthquake in 2016 and has barely added a single rental property since then, yet the population continues to increase. This aligns with the continuing shortage of rentals shown in this pagecombined with myRent Growth Rates chart here

It is hard to see the current building activity matching an apparent 5000 home shortage of rental properties in the short term which provides for a super opportunity for investors. Yields will only increase from current levels in the short term.


The above charts show some strange growth, eg Wellington from 12,000 in 1993 to 45,000 now seems too high so I did some work on the reliability of the Active bond stats, this took a lot of effort:

What this shows is that there has been a strong growth in rentals, but that MBIE have failed to register a lot of rental bonds, some of these may be business rentals and not requiring a bond, some may be landlords not registering, but I suspect the answer is complex and confused.

However that does not change the conclusion, registered Active bonds in Wellington ceased growing in 2016 and I expect they should be still on a straight line, making Wellington short of about 5000 rentals.

Jonette 2011