Atom Go Tian
Senior Data Analyst
Ray White Group
Firstly, what is “affordable?” According to Stats NZ, average weekly earnings as of June 2023 was $1,273 per week, a 25.3 per cent increase from five years ago. During the same period, rents grew slightly slower with the median asking rent for houses growing by 18.2 per cent to $650 and the median asking rent for units growing by 25 per cent to $550.
Over the last five years, weekly earnings growth has outpaced weekly rent growth, but is it enough? A helpful perspective would be to consider weekly rent as a percentage of weekly earnings.
As of June 2023, weekly asking rent for houses made up 51.1 per cent of weekly earnings, down from 54.1 per cent just five years ago. The share of weekly asking rent for units as a percentage of weekly earnings has stayed relatively flat, between 42 and 42 per cent.
In comparison, Australia’s rent as a share of weekly earnings has only recently peaked at 40.5 per cent for houses and 38.4 per cent for units after having spent the majority of the past decade between 33 and 35 per cent.
So, what can we consider as affordable? If we take weekly earnings at $1,273 and if we assume the share of rent to match Australia’s “affordable” share of rent at 33 to 35 per cent, then weekly rent in New Zealand should only be between $425 to $450 a week. Instead, as of June 2024, Ray White saw median asking rents increase further to $680 for houses and $575 for units.
Using the share of listings under $450 as our benchmark for affordability in New Zealand, Dunedin Central must stand out for renters with 48 of all 153 house listings in the last 12 months (31 per cent) coming with an asking rent under $450. Special mention must be given to Oamaru North, Oamaru, and Taumarunui as well, which have the lowest median rents of the top 10 suburbs (this means they have the highest percentage of total listings under $450).
When it comes to units, renters will find the most luck finding a home under $450 in Auckland Central and Hamilton East which respectively saw 474 and 363 unit listings under $450 in the last 12 months. The two suburbs in this list with the lowest median rent are Melville at $350 and Hamilton East at $375 (both suburbs saw at least 60 per cent of all listings in the last 12 months asking for rent under $450).
As a rule of thumb, it seems helpful to avoid the major cities of Auckland and Wellington if you are prioritising affordability in your search for a new home for rent. Over the last 12 months, only 1.9 per cent of Auckland’s 13,018 house listings saw an asking rent under $450 while this stood at only 1.8 per cent of Wellington’s 1,095 house listings. Things are a bit more hopeful if you extend your search to include units: 10.8% of Auckland’s 10,682 unit listings saw an asking rent under $450, while 7.7 per cent of Wellington’s 1,206 unit listings were under $450.
Media contacts:
Atom Go Tian
Ray White Group
Senior data analyst
agotian@raywhite.com
+61 422 089 938
Cassandra Glover
Ray White Group
Media Advisor
cgover@raywhite.com
+61 447 000 472