Record highs for rents and record drops for house prices

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Tenants are having to dig deeper into their wallets to pay their rent.

Wednesday, February 22nd 2023, 9:43AM 2 Comments

by Sally Lindsay

The latest Trade Me property data show rents kicked off this year at all-time high, with the national median weekly rent reaching $595 in January.

This is a $25 rise or 4% increase when compared with the same month last year.

It follows three stagnant months where the national median weekly rent remained at $580 throughout the last quarter of 2022.

Trade Me property sales director Gavin Lloyd says after a period of rents cooling off, January’s jump will be unpleasant news for renters around the country.”

Along with the new national record, the Auckland ($630), Bay of Plenty ($615), Marlborough ($550), Northland ($580), Taranaki ($580), Waikato ($540), and Wellington ($660) regions had their highest median weekly rents of all-time last month.

Looking at the year-on-year percentage change, the Northland (+16%), Taranaki (+14%), and Manawatū/Whanganui (13%) regions saw rents rise the furthest in January, says Lloyd.

“It’s too early to tell how the rental market will be impacted in those regions affected by the recent cyclone and flooding. What we do know is that January marked the second month in a row where the median weekly rent in Auckland, Hawke’s Bay, and

Northland reached a record high. In the wake of the recent devastating weather events, we expect supply to fall significantly in the coming months putting more stress on tenants in these regions.”

The number of rental listings nationwide increased by 1% year-on-year in January. “While this is smaller than we have seen in previous months, this now marks 10 consecutive months of supply increases,” says Lloyd.

While nearly every region had an increase in listings when compared with January last year, the biggest increases were in the lower North Island. Rental listings were up 52% year-on-year in Manawatū/Whanganui and 40% in Wellington.”

The only regions to see a drop in listings were Southland (-21%), Auckland (-11%), and Otago (-4%).”

Demand also rose in January. Following three months of year-on-year downturns, demand picked back up with an 8% year-on-year increase.”

Rents for urban properties reach new highs

The national median weekly rent for an urban property rose to a new high of $530 last month, increasing 6% per cent year-on-year.

Apartments ($525), townhouses ($630), and units ($480) had record-breaking national median rents in January.

However, the Wellington region was an outlier last month, with the median weekly rent unchanged in 12 months, at $590.

Lloyd says if this is broken down further, rents for units (-3%) and apartments (-2%) in the region actually fell year-on-year.

Large property rents hit the $1,000 mark

The national median weekly rent for large properties (5+ bedrooms) reached a milestone in January, rising 8% to $1,000 for the first time. Medium properties (3-4 bedrooms) also hit a new high of $670, up 3% in 12 months.

Much like with urban property rental prices, the Wellington region was the odd one out, with the median weekly rent for large properties falling by 4% in 12 months.

Rents for medium-sized properties in the region remained flat on the year prior, while the median weekly rent for small properties (1-2 bedrooms) in Wellington reached a new high of $580.

Record drop for house prices

While rents increase, property prices started the year with a record-breaking price drop.

The national average asking price fell by 8% year-on-year last month to $878,800.

“This is the biggest drop we’ve ever seen and puts the national average back where it was in September 2021,” Lloyd says.

Looking around the country, the main centres took the biggest hit, with the average asking price down 11% year-on-year in both the Auckland and Wellington regions.

In the Auckland region, the average asking price was $1,116,850 in January, while in Wellington it was $872,400.

“We haven't seen prices this low in these regions since August 2021,” says Lloyd. “As we would expect, it was those regions which had the biggest price gains over the past three years have now had the largest drops.”

Hawke's Bay region’s price drop was a close third, with the average asking price falling 8% in 12 months.

However, not every region saw prices cool off in January. In the North Island, the Northland (+5%), Taranaki (+3%), and Waikato (+1%) regions had average asking prices increase year-on-year.

Looking at the South Island, every region, with the exception of Southland (-1%) saw prices increase last month when compared with January 2022.

Overall, Lloyd says the latest figures painted a drastically different picture of the market than this time last year.

“It’s almost unthinkable that in January last year, the national average asking price skyrocketed 25% year-on-year, reaching a then-record of $957,950.

“It’s clear that 12 months later the market is in a wildly different place, with property prices now falling year-on-year for three months in a row.”

Record-breaking supply fuels price drops

Last month there were more properties listed for sale than in any other January on record.

Nationwide supply spiked by 29% when compared with the same month last year, as has happened consistently over the past few months.

While every region had a year-on-year increase in listings, the Nelson/Tasman region was a standout with supply rising by 83%.

Demand, however, went the other way and fell by 5% nationwide last month when compared with January 2022.

The only regions that did not see a dip in demand were Marlborough (+5%), Otago (+4%), Nelson/Tasman (+1%) and Taranaki (+1%).

“We’ve now seen more than 12 consecutive months of sky-high supply combined with slow demand across the country,” says Lloyd. “Unless market forces change prices are going to continue on a downward spiral.”

Large properties see bigger price drops

Breaking down the listings by property size shows large properties (5+ bedrooms) were the most impacted by price drops.

Small (1-2 bedrooms) and medium (3-4 bedrooms) properties had the average asking price drop by 7%, while those bigger property prices fell by 10%.

Although the Auckland and Wellington regions had similar overall year-on-year price drops last month, breaking down the numbers by property size shows some variance between the markets.

In Wellington, small properties took the biggest hit by far, with the average asking price falling by 13% year-on-year.

However, this wasn’t the case in Auckland, with price drops comparatively consistent across properties of every size.

Apartments hold their value

When compared with other property types, apartments held their value in January.

Nationwide the average asking price for an apartment fell by 3% year-on-year last month, while prices for townhouses (-9%) and units (-13%) dropped considerably further.

In Wellington (+2%) and Christchurch (+6%), the average asking price for apartments actually showed a year-on-year increase in January, while prices for all other urban properties dropped.

Tags: house prices

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