David Faulkner: Property Brokers General Manager of Property Management on improving rental affordability
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Good time to be a renter too. Latest Property Brokers report shows 15 of 16 regions are a renter's market. The share of income going on rent falling from 44 to 40% nationwide. David Faulkner is the GM of Property Management at Property Brokers and is with us. David, very good morning to you. Good morning, Mike. So we're talking about here rental affordability. So we always talk about what the rent is, what the average rent is, whether it's up or down. What we're talking here, I think about, correct me if I'm wrong, is what percentage of your income goes on rent, right? Right. correct
yeah
so why is that getting better is the rent moving down or the wages moving up or a bit of both
i think it's a bit of both mike but um when we do our analysis what we see is that rents have plateaued and they've stayed relatively static now for about two to three years incomes have also been increasing steadily as well and that's what's helping rental affordability some of the provinces you've still got some regions like west coast southland rents are steadily increasing But particularly in the North Island, you've seen it plateaued and some of the major census rents have actually come back.
Indeed. So you look at a place like Gisborne, they're the largest improvement. So they're down 7%. It's gone from 52% to 45%. But 45% is still up there. So it depends on what you look at regionally. Is there massive regional variation or not?
There has been big regional variations. Particularly, I mean, you highlight the Gisborne. Hawke's Bay was another region. If you're looking really pre-2023, rents were increasing in those regions 10% per annum. Now that's unsustainable. And so it was always going to reach the cliff where it would stop and it would just plateau. However, the South Island, it's very, very different. It's almost like a different country. You've seen Southland, you've seen West Coast. rents have started to increase and catch up i think the big story here mike is that the big cities the auckland's the wellingtons the christchurch there's very little difference now between provincial new zealand rents and the major centers it's amazing that's a big change
so on the west coast because they're the outlier is that the mining boom is that people coming to the region or is it just lack of supply or once again a bit of both
I think a bit of everything. One of the things that we're learning when we're doing these rental affordability indexes, there's lots of moving parts, whether, you know, government policy in some cases. And I think evidence of that is Labour's interest deductibility, where they've flipped on that and they've recognised rightly that that put pressure on rents. But also there's other things as well. Population. I think you've seen some people move away from the cities, look for a different lifestyle. That's a post-COVID thing. And people look for where rents are more affordable. Are we settled into a situation now where
this is the new norm?
Yeah, I actually believe. Now, the last time we saw a period where rents just plateaued and stayed flat was at the late 90s, early noughties. I think we're going to have a similar period where you're going to see rents flat potentially for about five to six years. Wow. We're about three years into that cycle.
Interesting. Good on you, David. Nice to talk to you. Appreciate it very much. David Faulkner, who's the GM of Property Management at Property Brokers. I can tell you also in this morning, the National Medium Weekly Rent, having just said that, is up $5 on average, whereas $6.25 for August, that's the first year-on-year increase since Jan of 25, 18 consecutive months stagnant or falling. Volume of new rental listings nationally fell, while the demand month-on-month is up. So that explains
that.
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