Rampant Rental Rise Continues for Seventh Consecutive Month Amidst High Net Migration and Limited Supply

Date Published: 19 March 2024

Key Facts

• Rent prices continue to increase rapidly, with a 6% rise in the year to February.
• This trend of rising rent has been consistent for seven straight months, due to factors like rising wages, strong demand from high net migration, and a limited property supply.
• Although net migration may have hit its peak, the inflow of people to New Zealand remains high, contributing to the demand for rental properties.
• First-home buyer activity seems to have eased, dropping from over 26% to 25.5% in just the first two months of this year.
• Cashed-up multiple property owners, including investors, have had a strong start to this year.
• Moving forward, the impact of the reinstatement of mortgage interest deductibility for investors might influence the market.
• 60% of suburbs have experienced a rise in property values since December, indicating that the recovery is gradually spreading.
• Despite a 0.3% drop in the third quarter of 2023, New Zealand GDP might have marginally risen (around 0.2%) in the last quarter of 2023, avoiding a technical recession.

Article Summary

Rents in New Zealand have been rising rapidly for seven straight months, with a hike of 6% in the year to February. This increase, which is double the long-term average, is fueled by factors like increased wages, high net migration, and tight property supply. Even though there are signs that migration has peaked, the influx of people into New Zealand continues to be strong, pushing up demand in the rental sector.

There is a slight easing in first-home buyer activity, with their share of property purchases dropping from over 26% to 25.5% at the start of this year. However, multiple property owners and investors have had a strong year so far. Their potential influence on the property market might increase with the reinstatement of mortgage interest deductibility.

According to CoreLogic, an upturn is expected as almost 60% of suburbs have seen hikes in property values since December. Despite the economic challenges facing New Zealand, it appears to have avoided a technical recession by the end of 2023, with a slight GDP growth of around 0.2% after a fall of 0.3% in the third quarter.

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