Regions hit by surprise rent rises

Emma Pearce has moved three times in the past two years and says being a tenant is tough going.

‘‘Renting in Northland is hard. It’s an uneasy feeling not having the stability with young children,’’ says the Whangarei mum.

‘‘Demand is high and rental prices are high. I actually ran out of time to find a healthy home for my asthmatic son within my price range, due to a lack of rentals.’’

She has moved in with family while she looks for a new place.

New data from Barfoot & Thompson shows Northland rents increased 27 per cent between 2013 and 2018, to an average of more than $350 a week.

That compares to just 15 per cent growth in central Auckland over the same period. The cheapest part of Auckland – Franklin/rural Manukau – had average rent of just over $400.

Economist Shamubeel Eaqub said Northland’s rental growth was extraordinary and would put significant pressure on tenants’ disposable incomes.

He said provincial New Zealand had become used to operating on the assumption that a certain number of people would leave each year. Now they were not, and populations were growing quickly, putting pressure on housing stock.

‘‘The provinces are more sensitive to imbalances,’’ Eaqub said. ‘‘The rate of building tends to be small so sudden changes in population growth have a huge impact.’’

Smaller centres also had higher percentages of renters and more limited rental stock.

Across Auckland as a whole, average rents lifted by $22 a week, or 4 per cent over 2017.

Eaqub said he had been surprised at how slow the rate of rent increases had been in Auckland, given the attention the city’s housing shortages received.

‘‘Rents are an indication of shortage and it’s showing that the shortages are more acute in the smaller regions. But it’s easier to resolve because you don’t need to build that many houses.’’

Barfoot & Thompson said cheaper areas had experience faster rent growth over the past five years.

But property investors aren’t necessarily making more money. Property management firm Crockers said low interest rates and prices rising quickly had contributed to a drop of more than one percentage point in average Auckland rental yields since the end of 2011.

It warned gradual increases in interest rates during 2019 and 2020 would start to put more upward pressure on rents.

Ten per cent of the landlords it surveyed said the requirements to insulate and meet other higher rental property standards were affecting Auckland rents.

Other reasons why tenants could expect to pay more included the higher minimum wage and Accommodation Supplement, and higher incomes as the labour market tightened.