Nick Tuffley: ASB Chief Economist on rent prices hitting the lowest point since 2023

New data shows rents are down to the lowest point since 2023. 

They’ve dropped 3% in the last year to $628 per week according to realestate.co.nz. 

Urban centres had the biggest decline, with Wellington leading with 11.8% drops and Auckland following with 2.3%. 

ASB Chief Economist Nick Tuffley told Ryan Bridge its very much an economics lesson in basic supply and demand. 

He says that we not only have more listings coming onto the market, but also net immigration has fallen over the past few years, so there’s less demand for rentals. 

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Episode Transcript

Speaker 1 (00:00):
New data shows rents down three percent nationwide to the
lowest point since twenty twenty three. New listings while you're
drowning in them up sixteen percent nationwide in Wellington have
more than doubled. Nick Tuffley, ASBTV conins with us this morning. Nick,
good morning, Good morning. So basic supply and demand.

Speaker 2 (00:17):
Very much and economical lesson in that we've got not
just more listing that have come through onto the market,
but when you also look in the background, we've gone
from a few years ago we had that really strong
net immigration, rental growth really strong. Now that net immigration
has faded to a whisper and you've got a lot

(00:37):
of supply, a lot of building activity that's still brought
new houses onto the market as well.

Speaker 1 (00:43):
What's bucking this trend which areas well.

Speaker 2 (00:46):
I think in general what you're seeing is when you're
looking at provincial New Zealand, that's where rents have tended
to hold up or increase. In this particular data, there's
been a couple of areas that have done well, like
Southland and West Coast. Now a couple of caveats theres
when you get into a small region you get a

(01:07):
little bit of noise and a bit of bouncing around.
But those ones you've seen some strong rental growth coming through.
But just be aware when you've only got a few
properties on the market and you're comparing to a year ago,
it could be a very different could be a mention
this time, could have been at a louthouse last year
that you're comparing to.

Speaker 1 (01:25):
Does this have a snowball effect and potentially impact house
prices when you yield start a roading for your rental owners,
for your landlords, then the property values start dropping too,
and perhaps they're more inclined to sell.

Speaker 2 (01:38):
It can at the margin. I think what we've got
to remember is is that what tends to drive rents
over a long time. There are a lot more linked
to income in terms of what can people actually pay,
and less to prices. But it'd be fair to say
when you looking at a landlord at the moment your income, yes,
that's down, but also think about your costs as well.
For your biggest cost, which is your mortgage, has been

(02:00):
reducing a little bit, but in the background you still
got a lot of outgoings like your rates and your
insurance that are still creeping up.

Speaker 1 (02:07):
Nictuffley A speechief economists. For more from Early Edition with
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