Auckland apartment rental is easier as international students stay out

By RNZ

Auckland apartment rents have eased, attributed to a drop in demand as international students are largely excluded from the country.

Rental prices in the old Auckland City area had fallen 1% in the September quarter, compared to the same period last year.

Infometrics economist Brad Olsen said the reduction in the international student population due to border closures to control Covid-19 was likely the cause.

“That doesn’t sound like much, but when other parts of Auckland are growing at 4 percent per year, and even the national figure is over 3 percent per year, that decline starts to be significant.

Apartment rentals in Auckland Central West fell 9.7% during the September quarter, compared to the same period a year ago, and rents in Auckland Central East fell 5.6%; both areas have significant student populations.

Developers have also been less likely to want to build apartments in Auckland, with a 50 percent reduction in consents during the three months through August, compared to the same period last year.

“Not only can they not get funding for these projects, without people getting into them there is not as much activity,” Olsen said.

“Much of the time these apartments are bought by investors in the city center to rent to others, in particular to international students.”

There were 58,000 students paying fees with a visa in New Zealand at the end of September 2019, but that number dropped to 41,000 at the end of September this year; a 30 percent drop in numbers.

In January, before the impact of Covid-19 began, Olsen said that the rental market as a whole was showing no signs of slowing down. Sustained population growth, lower homeownership rates, and rising rental costs (due to stricter standards) were expected to keep the pressure on rents throughout 2020.

-RNZ