What a year this has turned out to be with our borders finally opening in the middle of the year, and life being re-injected into the city. The question now is, will the rental market be what it was pre Covid? The time it takes to find a resident has stagnated at around 4-6 weeks, while supply has also increased, with roughly 970 listing currently active in Wellington City, which traditionally has had a shortage of rental homes and high rent as result. For the second consecutive month in November, the median weekly rent throughout the country was $580. When compared to the same month in 2021, this represents a 4% rise, matching the record high set in April of this year. Residents will undoubtedly feel the sting in their pockets alongside other cost-of-living hikes. However, a closer examination of the data reveals that there was considerable regional variation, with most regions experiencing a rent boom and Auckland and Wellington experiencing no year-over-year gain. Looking around the country, Christchurch City (with a similar population to Wellington) has approximately than 820 active listings, whereas Auckland has roughly 2,300 active listings.
So, what is happening to the rental market? According to the most recent Trade Me Property data, the national median weekly rent jumped 7.5% year over year last month, which is higher than the Reserve Bank’s estimated annual inflation rate of 7.3% for the third quarter of the year. Since January of this year, the national median weekly rent has comfortably hovered between $570 and $580. When we compare the amount from last month with this time last year, it really decreased by 1%, or $5. In comparison to the same month a year ago, Wellington was one of just two regions where the median weekly rent did not change. For residents in these areas, where rents have skyrocketed recently, this will be a relief.
The median weekly rent in Wellington has soared by 33% during the last five years. Given that the country’s median weekly rent has increased by 28% over the past five years, the region is now outpacing national price increases. With a 31% increase year over year, there were more rentals advertised onsite last month than at any other time in history. In November, the number of rental listings increased nationwide by 6% compared to the previous year and for eight consecutive months, the supply has now increased from year to year. The second-largest increase was in The Capital, where the supply increased by 49%. The region’s steady rent prices indicate more options for renters. The median weekly rent in the Wellington region was $600 last month, which was $50 less than its all-time high in February. We have now gone three months without any percentage rent growth year over year in the area. Last month was a notable month for the Kapiti Coast region. In Kapiti Coast, the average weekly rent dropped by 9% from the previous year to $550 last month. Since July 2019, rentals haven’t decreased in the neighbourhood till now.
Trade Me figures show nationwide rental listings increased by 13% last month compared to the previous year. The supply in the rental market has been steady over the previous few months, with a few locations around the nation consistently experiencing enormous year-over-year gains. For the third consecutive month Wellington led the charge, experiencing the greatest increase in rentals nationwide, whilst demand was down 39% year on year. The range of stock, predominately 1–2-bedroom properties has given residents a range of choice with modernness and location being their two deciding factors. As of 15th of December, 1–2-bedroom properties make up over 450 active listings on TradeMe. This is almost 50% of the existing stock in Wellington City and is high for this time of year.
The market is likely to enjoy a surge of activity as we move into the warmer seasons of the year. It will be interesting to see how the seasonal rush affects the market given that supply and pricing are already under pressure. We’ve seen a third of inquiries recently from overseas residents considering a move to Wellington; around 40% of these inquiries are from families in South Africa, Australia, the United Kingdom, and Germany. In Wellington, diplomats have also started looking for new ambassadorial houses, with several embassies considering renting sizable executive properties for the ensuing three to five years.
We foresee a gradual decrease in the number of current listings and an increase in demand, particularly when the international students arrive for the new year, as more people from abroad enter the country on working-holiday visas. As a result of the predicted rise in international migration during the forthcoming year, we predict an increase in rent costs, particularly in the centre city region where the supply of 1-2-bedroom homes is plentiful and demand is slow.
I’ve emphasised in a few previous posts how important it is to market your home as much as you can in order to set it apart from the competition. This strategy has not altered, and is more crucial than ever to deal with Wellington’s rapidly increasing rental stock. One noteworthy trend we’ve seen is that an increasing number of prospective residents are heavily depending on the 3D tour to decide whether they’re prepared to enquire and, eventually, apply.
If you are having any difficulty at all managing your rental property or portfolio, or if you are just after some assistance, do not hesitate to get in contact with me. Tommy’s Property Management is pleased to offer a free, no-obligation rental appraisal and advice. No conversation is too difficult, and we are more than happy to do our best to assist.