Rents stabilise, but at high level as food costs soar

High rents continue to put the squeeze on tenants, but new figures show rent growth is easing, and it is noticeable if compared to price inflation in other areas.

The broader rental market’s 4.1% annual increase was the same as last month and only slightly up on August’s figure of 4.0%.

It contrasted with Trade Me Property’s latest rental figures, which showed the national median rent being asked on the site was up 7.5% over the year, just ahead of the 7.2% rate of inflation.

But while the national median rent was $575 in September, a jump of $40 on the same time last year, it had remained in the $570-$580 bracket since January this year, Trade Me Property sales director Gavin Lloyd said.

When the national figure was compared to August, it actually fell by 1% or $5, but some regions, including Southland, Otago, Canterbury, and Manawatu¯/ Whanganui had big annual increases, he said.

Infometrics principal economist Brad Olsen said Trade Me’s figures probably better reflected how new tenancies were shifting, but its data did not have the breadth the Stats NZ figures were based on.

While the measures were different, the trend being measured was actually moving in a similar direction, and it indicated rental growth was starting to slow, he said.

‘‘. . . the national rate is stabilising, and although rents are high, there has been some pullback in increases.’’

The easing was being driven by new supply coming on to the market, and a net annual migration loss, of which the largest group was 20 to 29-year-olds who were the prime rental group, he said.

Rents were still rising, and the latest consumer price index (CPI) data had rental prices up 4.6% in the year to September. Kiwibank had said that was the highest rate since 1991.

But the rate of inflation contrasted with that of other products. Food prices were up 8% in the CPI data and they jumped 10.1% in October, the biggest increase in 14 years, Stats NZ said on Friday.

Property Investors Federation president Andrew King said winter was always a slow time for rents, and demand was down in Auckland central and Wellington.