Renters’ incomes struggle to keep up with cost of housing
Wellington rents have risen at almost four times the rate at which incomes are increasing.
Trade Me website has released its rental data for October.
Spokesman Aaron Clancy said the median weekly asking rent in Christchurch, Wellington and Auckland cities rose between $20 and $40 a week compared with the year before. In Wellington central, the median rent was up 7.4 per cent year-on-year to $580 per week. In the wider Wellington region, it was up 11.1 per cent to $550. In central Christchurch it was up 5 per cent to $420 and in Auckland central, up 3.6 per cent to $570. The wider Auckland region was up 1.8 per cent.
Nationwide, the median weekly rent was up 4.2 per cent to return to a record of $500 per week. That compares with a national increase in wages over the past year of about 2 per cent. In October, there were 17 per cent more inquiries on Trade Me than for the same time in 2018.
Brad Olsen, an economist at Infometrics, said there would be a point where slower income increases would put a limit on rent rises. However, increased construction activity would see rental price growth slow over the next year.
‘‘Rental growth continuing to rise above wage growth can’t stay that way forever, as at some point renters simply wont be able to afford higher prices. Already high housing costs are seeing some families on lower incomes make difficult decisions over where to allocate their funds, and the ability to pay increased rental prices may be running out. Rents do look set to remain rising faster than wages, with wage pressure strong but not as strong as expected.
‘‘The tight labour market – with unemployment still at low levels – would generally see wage growth above what we have been seeing recently, which may be due to a lack of job churn. One reason for the high, but not as high as expected, wage rises is that people are staying in their current job and not looking to switch out and bargain for better pay,’’ Olsen said.
Clancy said tenants in the big cities seemed to be trying to beat the seasonal summer rental rush and hunting out their next flat early.
‘‘October saw a growing demand for rentals in our three main metros with the number of inquiries on rentals in Christchurch city rising a staggering 28 per cent on October 2018. Wellington City saw inquiries jump 7 per cent on the year prior and Auckland City experienced a 14 per cent spike in demand,’’ he said.
‘‘Typically we see rents begin to heat up from December onwards but this year tenants are trying to get ahead of the game and secure a rental before Christmas.
‘‘It could prove to be a very wise move; while prices are increasing now we are predicting they are only going to get higher as we head into the business end of summer. There will almost certainly be some new records set in early 2020.’’ Clancy said high property prices were keeping people renting for longer.