A Changing Rental Market: How did 2024 actually close, and how does this explain 2025 going forward?
For this second “Property Professor’s View” article, I’ve focussed on the rental market more broadly for New Zealand and specifically for Auckland. Timeframes look both at the reality of 2024, and the current context of 2025. Using industry and government data, we make some useful commentary on how this contextualises in the wider macroeconomic environment and property ecosystem. For instance, anticipated interest rate changes in 2025 may play out very differently on the rental market depending on the geography and timeframe of reference. We note that the housing and rental market is as much a political issue as it is an economic issue. The direction of travel in government and housing policy, will potentially shape the market to some degree.
The ‘Official’ National Rental Picture – Towards the End of 2024
At a national scale we see at the last recorded counts in November 2025 with rents averaging at $600 per week. Subnationally, these regional rents range from $400 per week in the West Coast to $650 per week in Auckland. In terms of monthly percentage changes toward the end of 2024, we see no significant change nationally. However, regionally the largest change positively was in the Marlborough region (+5 percent change), and negatively in Southland (-7 percent change).
What is Happening in Auckland? – End of Quarter 2024
Looking more specifically for Auckland, we explore a sample of 17,700 rental properties that have a profile of with 3-bedroom properties dominating at 6,608 rentals. We find an average bedroom rent sitting at $705 per week. This is close to most properties that are 3-bedroom properties sitting at $691per week.
At District level we see the highest average bedroom rent at $865 per week in Central Auckland (for both Central Auckland, and Central Auckland West), although we bear in mind that the few high value 5-bedroom properties that sell in the Central Auckland West district skew the averages significantly upwards. The lowest district average bedroom rents are at $608 for Franklin/Rural Manukau, which are located at a distance from the CBD.
The number of 3-bedroom rentals in the sample (17,700) are highest in the West Auckland district at 1210 rentals. Compared to the lowest number of rentals within the central district that sit at 71 properties. As typical of many major cities, 1 and 2 bedroom properties dominate with the number of rentals sitting at 587 (1 bedroom) and 422 (2 bedroom) respectively.
Finally at district level, in terms of percentage change in rentals during the final quarter of 2024, we see most changes in North Shore and West Auckland. Here we see the number of rental properties increasing by 25 percent in North Shore, and 18 percent increasing in West Auckland as an average for all bedrooms. The largest percentage change rental price swings are in Rodney with an increase of 1 percent, and a fall in central Auckland at -1 percentage.
How do these changes sit in the wider Macroeconomic and Microeconomic Picture?
Macro drivers weave in with these micro trends, particularly given recent changes in negative employment rates and negative growth rates for New Zealand. Noting that these national rates are largely affected by global shifts in inflation and interest rates.
Often left out of the conversation is the influence of exchange rates, which has effectively of late seen an erosion of global values for New Zealand properties (and products/services). Particularly given that in early January 2025, the NZD was trading near multi-year lows against the USD. Specifically, the NZD was at $0.56, approaching its lowest point in over two years. A low NZD means that importing becomes relatively more expensive which affects purchasing power, such as the income for rent. On the flip side, foreign investment into New Zealand could be seen as a positive over the longer term (depending on how you look at it).
At the time of writing, for New Zealand, the good(ish) news for investors of property is that inflation rates are within the ‘acceptable’ marker at 2 percent for the first time since 2021, and interest rates are at a relatively low(ish) at 3.75 percent (OCR – Official Cash Rate).
Concern regarding economic growth continues if GDP contracts similarly to Q3 2024 at negative1 percent. Especially if the consequence is budget deficits and increased public borrowing debt. Alongside this is unemployment figures that continually rise to a projected 5.3 percent in 2025.
Taking this to a microeconomic perspective, we may see significant pressure on supply (investors/landlords) to cover income shortfalls for those servicing mortgages, whilst demand (renters) will have pressure in paying rent. The demand profile of rentals is of most interest in the scenario, given that supply of rentals has not waned, and demand for rentals continue to rise largely due to population reasons, rather than income reasons.
Summary: How do these rental changes sit in the Property ecosystem?
Policy more broadly involves medium term sectoral-structural government changes, such as public sector-cuts that continue to feed into the property ecosystem. A drive to ‘get the market moving again’ is balanced against a reduced effective demand in the economy as employment corrects. A risk being that a ‘paradox of thrift’ may occur, where the reduction in public spending and loss of jobs has an adverse effect on the economy, i.e. being thrifty may paradoxically shrink the whole pie.
As suggested in the prior quarterly insider report, 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 who are leaving for Australia and elsewhere (the ‘brain drain’).
The permanent and temporary effect of a ‘brain drain’ and ‘paradox of thrift’ will see a structural shift in the economy and population profile. The effect on the rental market may be significant in this regard, depending on how the economic picture (and political picture) ebbs and flows over the next year.
For the rental market, the picture is looking stable for rentals, in that the rental price has not fluctuated too wildly. The difference in 2025 is that we have an expected house price stagnation, small step falls in interest rates, and a surplus of ‘for sale’ stock on the market (longer clearing times). Meaning those that are looking for medium to long-term investment capital gains from rentals will be in the best position. Alongside, income investment gains possible at a shorter timeframe as interest rates fall.
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”.
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