Regions Rental Listings Compared

Private rental inventory is best viewed as a percentage of total rentals (Active Bonds), i.e. advertised vacant supply as a percentage of total demand. International studies suggest 3% is the balance point where more than that and supply exceeds demand or vice versa. My observation is that this is a little high for NZ, possibly due to the size of Housing NZ in the market. I prefer 2.5% for NZ, based on anecdotal evidence of shortages by region and surplus by regions in the past.

Based on data from 2nd August 2021

Of the major centres, the greatest relative shortage is now in Gisborne, followed not too far behind by Hawkes Bay and Taranaki. Construction continues to make a difference. Auckland and Nelson now have similar oversupply, while Wellington has almost caught up its undersupply.

There is now supply=demand private rentals for the entire country, unfortunately they are not where they are needed, it is too easy to build in the centre of Auckland where demand is not growing as fast as construction. This excludes the 70,000 HNZ rentals, and the 5000 HNZ rentals under construction and coming available very quickly!

News reports about Wellington shortage are still common, as is anecdotal evidence as a Wellington investor. Rents are rising well above the equilibrium of 23%of average income, reaching 26% in November 2020.

There is no shortage of rentals in Auckland, only a shortage of income to pay for the rents of private houses with the current levels of the Accommodation Supplement. Auckland keeps showing high vacancies, listings were 2.9% of active bonds in 2019, now they are 3.5%.

Most regions excluding Auckland and recently Christchurch, have a shortage of private rental homes. Here is a picture of the trend over the last 10 years:

While it is clear that most regions are short of Private rental properties, the balance is debatable, I have picked 2.5%, but this chart shows Auckland has sat around 3% since 2014, almost a full cycle.

To help understand the previous chart, here is the same chart with actual numbers of rental listings (inventory) Auckland being the bigger city has more homes available for rent. Note Trademe changed the rules for property company advertising in 2014, so earlier data is overstated for some regions (Waikato & BoP) but the trend since 2014 is likely to be correct.

The minor regions are also available, but do not fit on the above chart, so here they are against the 3% balance point;

North Island first

And the South Island

Jonette 2011