An article on rental prices appeared in the NZ Herald last week claiming that Auckland rental prices were dropping. Tenancy Bond Centre figures showed a 23% drop in Takapuna/Milford in February compared to February 2003. Sandringham rentals fell 20% while Ponsonby/St Marys Bay/Herne Bay, and Birkenhead/Northcote Pt both fell by 13%.
However these percentage drops refer to one and two bedroom properties only, not the area as a whole. There are not many one or two bedroom rental properties compared to two and three bedroom rentals. Because of the low number of rentals, the statistics can be quite volatile and lead to incorrect impressions.
When looking at two and three bedroom rental properties, where there is a larger number let each month, a completely different impression is gained. For two bedroom rentals in the 29 Auckland areas, 11 rose, 10 fell and 8 had no change. With three bedroom properties, 15 areas had rental price increases, 7 had decreases and 7 were unchanged.
Looking at New Zealand as a whole, two bedroom median rental prices have increased by just under 5% from $230pw to $240pw. Three bedroom rental properties have also increased by $10pw from $270 to $280.
There is no doubt that rental prices have not kept pace with house prices over the past year and that indeed makes things difficult for investors. However we need to look closely at statistics before we leap to the wrong conclusion of what is happening within our rental market.
