Inflation data fuels row over high rents

Opposition MPs have seized on a suggestion from Statistics NZ that new regulations have pushed up rent rises, which are now at their highest in more than a decade.

Statistics NZ said rents rose 0.8 per cent in the three months to the end of December, taking the annual average increase to 3.1 per cent, which is the highest since 2008.

Paul Pascoe, of Statistics NZ, said the rise reflected high demand for rental properties but also said the Healthy Homes Standards introduced in July were a factor.

Those rules set minimum standards for heating, insulation and ventilation, and Pascoe said some landlords may have passed on the cost to tenants.

ACT Party leader David Seymour said: ‘‘Labour has imposed new bureaucracy on landlords, attempted to ban overseas property developers, and banned letting fees.

‘‘The latter have now simply reappeared in other forms.’’

The Government should be freeing up land supply to bring down the cost of housing, he said.

National Party MP Paul Goldsmith said the rent rise was ‘‘massive’’ and blamed ‘‘additional burdens on landlords’’ as a factor.

Associate Housing Minister Kris Faafoi responded that there were many factors influencing rents.

‘‘It would be difficult to attribute the latest movement in rents to the Healthy Homes Standards alone.’’

A minimum level of adequate healthy accommodation was a basic right, he said. The standards had been been well-signalled so landlords had time to spread out the cost of any work, he said.

A spokesman for Faafoi said that under the existing Residential Tenancies Act, tenants could go to the Tenancy Tribunal to challenge rises that raised their rent substantially above rents charged for similar properties in comparable areas.

Statistics NZ said the average annual rent rise was 4.5 per cent in Wellington, 1.9 per cent in Auckland, 4.9 per cent elsewhere in the North Island, and 1.5 per cent in Canterbury. The rent rises, higher international and domestic airfares, and petrol price increases helped push up annual inflation to 1.9 per cent in the year to the end of December,

it said. Transport costs rose 2.1 per cent during the December quarter, largely driven by seasonal rises in international airfares, which increased 9.3 per cent.

Petrol prices were up 1.6 per cent in the quarter with the average price of a litre of 91 octane petrol, after discounts, rising 3c to $2.14.

Most analysts had been expecting annual inflation to rise from the 1.5 per cent figure recorded for the year to the end of September.

But the quarterly increase in the Consumer Price Index during the final quarter of 2019 was higher than most analysts expected at 0.5 per cent. The inflation figure appears to make it even less likely the Reserve Bank will cut the official cash rate (OCR) from its current 1 per cent when it releases its next monetary policy statement on February 12.

The rise in inflation and the corresponding increase in the gap between inflation and the OCR means the existing cash rate is more ‘‘expansionary’’ than it was when the Reserve Bank last set the OCR in November.

ANZ on Tuesday axed its forecast for a later rate cut that it had ‘‘pencilled in’’ for May, in part because it believed inflation was looking like it was ‘‘sitting close to target’’.

The Reserve Bank forecast a quarterly increase of 0.2 per cent in its November monetary policy statement, which would have taken the annual rate to 1.6 per cent.

ANZ said the Reserve Bank should be ‘‘feeling pretty comfortable with the current state of play’’, in the wake of the inflation figure.

‘‘Core measures of inflation are at or close to 2 per cent and the economic data pulse has recently improved.

‘‘We expect the OCR will be on hold at 1 per cent for the foreseeable future, barring global shocks.’’