Auckland Rental Market: Low Rents Today, High Potential Tomorrow
- Staircase Financial
- Oct 21
- 8 min read
Table of Contents:
Why Rents Are Falling in Auckland
Auckland’s rental market cooled significantly over the past year. Median weekly rents in the region dipped, roughly 2% lower than a year ago, at about $650/week on average.
A stark reversal after years of gains. This stagnation, and slight drop, in rents reflect a simple reality, supply has outstripped demand, tilting the market in favor of tenants.
Oversupply from New Builds
In Auckland housing supply grew by 10.3% from 2019–2024, outpacing population growth of 7%. This construction boom (particularly of townhouses and apartments) created a surplus of homes.
As one economist noted, an “oversupply of housing stock” in Auckland coincided with flat to falling rents and property values in the city.
Why was there suddenly so much rental stock? Several pandemic era shifts converged to boost supply:
Short term rentals converting to long term:
Many holiday homes and Airbnbs have been put on the long term rental market, increasing available supply.
Demographic shifts:
Younger would be renters (aged 18–25) are staying with family longer or moving overseas to cope with high living costs, reducing local rental demand.
Unsold homes becoming rentals:
A slow sales market means some property owners who have upgraded or moved out of their former family homes have become ‘reluctant landlords’. This resulted in extra rental listings and the increased competition to get good tenants kept a lid on rent rises.
New builds hitting the market:
Developers have completed many new dwellings (notably townhouses and units) in the last 3-4 years and when they couldn’t find enough buyers they rented them out to generate a holding income.
Auckland has faced an excess of rental stock which has kept rents low and even forced some landlords to offer incentives to attract tenants. For tenants, this has been a welcome breather after years of steep rent hikes.
However, for landlords and investors, the weak rental growth and longer vacancy periods have squeezed cashflows. Many investors who bought in recent years felt a cash flow strain, as expenses (mortgages, rates, insurance) climbed while rents stayed flat.
It’s an environment where tenants have more choice and bargaining power than they’ve had in a long time. More recently cashflow has improved markedly on the back of lowered mortgage rates which has more than offset the lack of growth in rents.
A Turning Point on the Horizon: Migration and Construction Trends
Industry observers believe that today’s rental oversupply is likely a short term phenomenon and a reversal may be on the way. A key reason is the drastic slowdown in new housing development.
Fewer New Builds Ahead
Over the past year, Auckland’s development pipeline has thinned significantly. Many planned projects have been cancelled or postponed. Building consents in Auckland fell to their lowest levels since 2018–19.
In the 12 months to November 2024, regional building consents hit a six year low. This sharp construction slowdown means that after the current batch of new homes is absorbed, fewer additional homes are due to be completed.
Essentially, the surplus stock is being eaten up while future supply is drying up.
Net Migration Remains Positive
At the same time, demand is poised to strengthen. New Zealand’s population is growing again, albeit more slowly than the post Covid ‘migration spike’ driven surge.
Net migration plunged in 2024 (New Zealand gained 27,100 people in 2024, down from 128,000+ in 2023), but importantly net migration remained positive. And forecasts suggest migration will stabilize at healthier levels.
Crucially for Auckland, most migrants begin their life in New Zealand by renting in Auckland.
Rents (and Property Prices) Expected to Rise Again
Property experts widely anticipate that Auckland rents will resume an upward trajectory over the next 1–2 years.
Major property managers note that the current oversupply is “temporary” and predict a market rebalance within 12 to 18 months.
According to Crockers Property Management, demand is likely to outpace supply by 2026, leading to shorter vacancy times and rising rents once again. That implies a potential rental shortage is developing, given the construction slowdown, meaning rents could rise sharply until enough new supply eventually catches up. Their long term outlook for Auckland landlords is “strong”.
A recent Reuters poll of economists found consensus amongst other analysts who echo this optimism. While 2024 saw an unusual flattening of rents, such stagnation never persists for long.
Once the pendulum swings, landlords regain pricing power.
Renters who enjoyed flat or falling rents this year may face renewed rent hikes in coming years if vacancy rates tighten quickly.
Economists also generally predict a return to house price growth.
A Reuters survey projected average NZ home prices to rise around 6% in 2026, aided by lower interest rates. Recent rate cuts by the Reserve Bank have already improved buyer sentiment, and further easing is expected to stimulate the housing market.
Auckland, being the largest and usually the first mover market cyclically, is expected to lead this rebound with strength once confidence returns in force.
In short, the same factors set to push rents up (growing demand and limited new supply) are likely to put a floor under property prices and then lift them.
An Opportunity for Savvy Investors: “Be Greedy When Others Are Fearful”
For property investors, the current conditions in Auckland present a rare window of opportunity. Rents are soft and buyer demand is subdued, which means more bang for your buck for those looking to invest.
As one seasoned investor quipped, now is the time to “be greedy when others are fearful,” before the market momentum shifts.
Here’s why getting into the Auckland market now could pay off in the near future:
Buying at or near the bottom:
After the recent downturn, Auckland property prices are well off their peaks. Getting in at today’s low prices sets investors up to capture the upside when values rise again in the coming cycle. Major banks and analysts expect a return to modest price growth next year as interest rates ease, so the cyclical window for “buy low” looks set to be closing.
Improving rental yields:
Paradoxically, the recent trends have improved the rental yields on new investments. Because property values have dipped while rents have flatlined, gross rental yields in New Zealand have lifted to around 3.8%, the highest since 2016. Those who buy now will see their yields further improve once rents begin climbing again.
Favorable financial tailwinds coming:
The financial pressures that made recent years tough for landlords are set to ease. Economists anticipate the official cash rate will be cut further, from the current 2.5%, with some predicting a low of 2% in 2026. Lower mortgage rates significantly reduce investors’ largest expense, interest, easing those cash flow strains. Inflation is back within target, which means the higher cost environment is stabilizing. These trends will improve the profitability of rental property ownership in the next few years. Buying before these tailwinds fully arrive allows investors to reap the rewards when they do arrive.
Future demand concentrated in Auckland:
Auckland remains the economic powerhouse of New Zealand and the primary destination for migrants, students, and young professionals. As net migration resumes, Auckland’s rentals will most likely be first in line to benefit from the influx of people. New residents typically rent for several years before buying, meaning a surge of tenants is likely in Auckland.
Limited new competition:
Because developers have sharply pulled back, there will be fewer new properties coming to market for both buyers and renters in the mid term. When this expected shortage hits, every extra dwelling becomes more valuable. Owning an Auckland rental property in a tightening market provides pricing power as investors can then command higher rents due to the dearth of alternatives.
Reassurance for Recent Buyers: Patience Will Pay Off
It’s understandable that investors who bought in the last few years, facing high interest rates, might still be feeling nervous. Many are experiencing negative or razor thin cash flow as they weather this soft patch.
However, the data suggests that holding on will be well worth it.
The fundamentals in Auckland are poised to swing back in favor of landlords. Leading market analysts are confident that today’s challenges are a short term adjustment.
With construction slowing and migration recovering, the conditions that depressed rents are already changing.
By around 2026, Auckland is expected to have robust rental demand and far fewer empty properties, which should relieve the pressure on any landlords currently struggling.
Some forecasters see the pendulum possibly over correcting from a surplus back to a shortage of rentals, implying landlords could regain pricing power soon.
If you purchased recently and your cash flow is tight, take the long view, you likely bought into Auckland for its strong long term prospects.
Those haven’t changed.
The city’s population will keep growing, the economy will expand, and housing (especially quality new townhouses and apartments) will be in demand.
What has changed temporarily is the cycle, but cycles always turn.
Rents appear to have bottomed out after a rare flat year, and modest increases are expected to resume.
Meanwhile, any future interest rate cuts will ease your financing costs, potentially turning a deficit into a surplus. In other words, the worst of the cash flow strain is likely behind you.
Investors who weather this period stand to reap the rewards of rising rents, and eventual capital gains, as Auckland property values inevitably recover.
As Crockers put it, “despite the short term challenges, the long-term outlook is strong” for Auckland landlords.
The Silver Lining
The Auckland rental market’s current weakness is a passing cloud that carries a silver lining which sets the stage for significant opportunity.
Rents are unlikely to stay low for long once the surplus is mopped up and people return to the city.
What looks like a challenging market now could prove to be a well timed entry point, before the tide turns in favor of landlords once again and the inevitable cyclical waves of capital growth arrive.
How big those waves of capital growth are will depend upon how much pent up demand accumulates before those waves become visible (i.e. prices rise).
The longer those waves take to arrive then the bigger they are likely to be when they do arrive.
Frequently Asked Questions (FAQ)
Why are Auckland rents currently low?
Auckland rents are temporarily low due to an oversupply of rental properties. This was driven by a construction boom in townhouses and apartments, more short-term rentals shifting to long-term, and some owners turning unsold homes into rentals.
Will Auckland rental prices rise again?
Yes, most experts predict rents will rise over the next 12–18 months. A sharp slowdown in new housing developments and stable net migration are expected to tighten the rental market and push prices upward.
Is now a good time to invest in Auckland property?
For many investors, yes. Property prices are lower than in previous years, rental yields have improved, and interest rates are expected to fall. These conditions offer potential upside before the next market cycle begins.
What’s causing the slowdown in new housing supply?
Many developers have postponed or cancelled projects due to economic uncertainty and reduced buyer demand. Building consents have dropped to their lowest levels since 2018–2019.
How will migration impact Auckland’s rental market?
Most new migrants start their life in New Zealand by renting in Auckland. As net migration stabilizes, rental demand is likely to increase significantly, especially with fewer new homes coming to market.
What should recent property buyers in Auckland do?
Hold steady. While cash flow may be tight now, falling interest rates and recovering demand are expected to improve rental income and capital gains over the next couple of years.
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