The rental market is experiencing a shift, with a record number of listings putting pressure on landlords and offering more options for tenants.

Record Rental Listings

Trade Me Property reports that the number of homes available for rent has reached its highest level in over a decade. March saw 41 percent more rental listings compared to the same month last year, marking the highest number since 2014.

Contributing Factors

Trade Me Property customer director Gavin Lloyd attributes this increase to a combination of factors:

New Build Properties: A surge in new build properties coming to market is adding more stock to the rental market.
Emigration: Many people are leaving the country, vacating their rentals, further increasing the supply of available properties.

Impact on Rental Prices

The high number of listings is leading to a decrease in rental prices. The median rent fell 2.3 percent year-on-year in March, reaching $635 a week. Tenants are saving an average of $15 a week, amounting to almost $800 a year.

Landlord Incentives

To attract tenants in a competitive market, some landlords are offering perks like free weeks of rent, grocery vouchers, and other incentives. This trend, not seen for several years, highlights the shift in power towards tenants.

Challenges for Property Investors

Property investment coach Steve Goodey says many investors are struggling in this oversupplied market. He attributes this to:

Oversupply: The government’s incentives for building new homes have led to an oversupply of rental properties, giving tenants more options.
Increased Costs: The cost of supplying a home to the market has increased significantly, making it more challenging for landlords to maintain profitability.

Goodey warns that the situation is worse than it appears for some investors, with many struggling to keep up and hiding their financial difficulties.

Longer Vacancy Periods

Gavin Lloyd confirms that properties are staying on the market longer before being tenanted. This trend, not seen in the past two to three years, further indicates the shift in favour of tenants.

Regional Variations

While the overall trend shows a decrease in median rent and increased competition, some regions are bucking the trend. Nelson/Tasman saw a record high median weekly rent of $600 in March, while Otago’s median rent increased by 5 percent.

The changing dynamics in the rental market present both challenges and opportunities. Landlords are facing increased pressure to remain competitive, while tenants have more options and leverage. The long-term impact of these trends remains to be seen.