Partnership: Barfoot & Thompson and The Property Knowledge
Barfoot & Thompson have partnered up with Professor Graham Squires from The Property Knowledge to give further independent depth of insight on property trends.
The Property Professor’s View – by Professor Graham Squires: A progressive 5 percent percentage - change increase over 5 years; A new leading District emerges
For this first “Property Professor’s View” article, I’ve focussed on short-term and long-term changes in the rental market for Auckland. Although we are mindful of how the whole property landscape works and interacts, particularly given that multiple drivers operate simultaneously in different markets. For instance, the sales market for owner occupiers and investors, will simultaneously interact with the sales market for rent.
Micro elements to look at in the rental market are those such as population change driving demand, and the new supply of rentals on the market. Especially when the tenure of supply switches from owner/occupier to investor/landlord. As an example, if the significant number of new arrival domestic residents, are renting properties from New Zealand ex-pats leaving for Australia and elsewhere.
Macro drivers weave in with these micro trends, particularly given recent changes in employment and growth for New Zealand. Sectoral-structural government changes, such as public sector-cuts and fast-track development fervour, are engaging with globally influenced shifts in inflation and interest rates.
A progressive percentage 5 percent increase over 5 years
So here, more practically, is what has happened more short term for Auckland in the rental market. Noting that the analysis and sample is taken from Barfoot & Thompson’s total of 19,955 managed properties, with a particular sample of 17,608 properties counted in Auckland (as of Quarter 3, 2024).
Over the last ten years it is interesting to see a progressive decline in percentage change of rental prices over first 5 years (6.45 percent in 2015; to 1.57 percent 2020), then a progressive percentage change increase over the most recent 5 years (1.57 percent in 2020 to 5 percent in 2024).
As a 10 year trend we see rents in Auckland averaging $683 per week, which were previously around $492 per week in 2015. The 10 year stock is now 17,608 in 2024, whereas previously it was 11,779 in 2015.
More short term in the last year, we see an annual increase in weekly rent by 5.00 percent, which is an annual increase of $32 per week. Plus, the stock of properties managed haven’t moved much, with 100 less properties managed than the prior year.
A new leading District emerges:
Districts and Geography:
We see a new Highest Rental District in 2024 which is Pakuranga/Howick, at $748 per week. Pakuranga/Howick has overtaken the Eastern Suburbs District, which previously held the top spot consistently (**except for 2020) over 10 years.
As for properties allowing pets, Central Auckland District is the most interesting, particularly given that only small number of relative managed properties (23 properties) command the highest rent of $941 per week.
Tenure and Type:
Over 10 years there has been a negligible change in relative rental price depending on the number of bedrooms. One bedroom properties having the largest increase, with $25 per week rent (5.85 percent change) increase over last year. This rise is in part related to Central Auckland District and its greater relative desirability of one bedroom properties.
Central District City continues to have the highest priced property by type, with townhouses at $734 per week rent, from a stock of 27 properties. The Apartment type of property is the highest stock of property managed, with 1020 properties that have an average rental price of $591 per week.
Tenancy:
For tenancy length we see an average length of tenancy at 30.4 months
Over a 5-year period we see a continuous rise from 26.6 months (2020) to 30.4 months (2024). With Franklin/Manukau Rural District being the longest tenancy average at 36.3 months in 2024.
Further Commentary:
The latest overtaking of Eastern Suburbs over Pakuranga/Howick in average rental prices demonstrates a changing rental offer over the whole of Auckland. Opportunities across the city are opening up for investors given average rents are continuing to rise in all districts. Especially given some districts are gathering a faster pace than traditional high valued areas.
The continued upward year-on-year rental price at 5 percent price changes should be held in view of both demand and supply. The rental stock available in the wider market has been increasing, as has demand via population despite some trail off, so a continued price rise demonstrates that there is still some upward pressure on rental price averages. As noted, Macro drivers weave in with these micro trends, particularly given domestic employment and growth; and globally influenced shifts in inflation and interest rates.
Professor Graham Squires - Biography:
Graham Squires is a Professor of Property Studies (and Head of Department) at Lincoln University, New Zealand. His research interests and publications largely specialise in Development, Planning and Housing through the lens of Economics and Finance. In addition to 100+ journal and research report outputs, he has authored six books in the discipline areas of Economics, Property, Planning, Urban and Environmental Studies, Real Estate Development, and Construction Procurement.
He has worked on a number of esteemed commissioned research projects with grant funders including The World Bank (WB), The United Nations (UN), National Government Departments, National Research Councils, and The Fulbright Commission (US-UK) – Visiting Researcher at The University of California, Berkeley. Graham serves as the Editor-in-Chief of the journal Property Management (PM). Graham also is also the Director of the property research company The Property Knowledge”.
Contact:
For further information contact Catherine Teoh, Barfoot & Thompson, cteoh@barfoot.co.nz.
In partnership with Professor Graham Squires, The Property Knowledge, admin@thepropertyknowledge.co.nz. Visit thepropertyknowledge.co.nz for more information.
