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Smaller properties, better rent growth

Two-bedroom properties and central city apartments are seeing the strongest growth in rents in the Auckland region, new Barfoot & Thompson data reveals.

Tuesday, October 29th 2019, 2:28PM

by The Landlord

Rents across the Auckland region have increased of late, with the average weekly rent coming in at $579 at the end of September, according to the agency’s latest quarterly rental update*.

That’s an increase of 2.95%, or about $16 per week, on the same time last year. But the rate of rental increase is slowing.

Barfoot & Thompson director Kiri Barfoot says it’s the second quarter in a row the average rate of increase has held under 3%.

“It is in keeping with a downward trend on price increases since early 2018, when weekly rent increases were typically closer to 5% year on year.”

However, there are some property types and locations that are bucking the trend, she says.

“Most notable are the smaller properties, with weekly rents for two-bedroom homes growing by 4.06% year-on-year to a regional average of $488 per week.

“This is driven in part by the growing number of higher-end apartments in and around the central city that fall into the two-bedroom category, although demand for this sized home elsewhere in the city remains strong also.”

Barfoot says the price growth in the two-bedroom sector of the market is particularly stark when compared to larger homes, which were seeing the opposite.

“On average, weekly rents for homes with four or more bedrooms are hovering around 1% higher year on year, and some will have seen flat or declining prices during the year.”

Alongside two-bedroom properties, central city properties, all of which are apartments, are doing well.

Over the quarter ending September, they attracted weekly rents that are 6.15% higher year-on-year which left the weekly average at $527.

But rental growth in these properties has softened since last quarter when the rate of increase surpassed 8%.

Some areas of the Auckland region were also seeing slightly more upwards pressure on weekly rents than the norm.

South Auckland and Franklin properties were renting for between 3.78% and 4.41% more than they were at end September 2018, while price growth was lowest in Rodney and the Eastern Suburbs.

Barfoot says that although there has been some softening of rental yields, they remain attractive when compared to many other investment opportunities, particularly bank interest rates.

"There is probably no better time for consideration to be given to investing in the property rental market.”

*Barfoot & Thompson’s statistics are drawn from the portfolio of 17,000+ private Auckland rental properties that are managed by the agency.

Tags: Auckland Barfoot & Thompson housing market investment landlords median rents property investment property management rental market rental returns rents

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Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 3.95 4.49
ANZ Special - 3.55 3.45 3.99
ASB Bank 5.20 ▼3.89 ▲4.05 4.39
ASB Bank Special - ▼3.39 ▲3.55 3.89
BNZ - Classic - 3.55 3.45 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.35 3.35 3.35
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank 5.80 4.14 4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.39 3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.55 3.39 3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.35 4.25 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.55 3.45 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.55 3.45 3.99
Median 5.34 4.02 4.09 4.39

Last updated: 22 November 2019 4:35pm

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