How rental info sources differ

01 March 2017

Are rents moving up or down … and where are the biggest changes occurring? Landlords interested in benchmarking the weekly rentals they receive against local and national trends can be forgiven for some confusion between the two key sources of regularly published statistics.

While Trade Me and government monthly statistics may be of interest, your Quinovic Property Manager is an excellent source for advice on rentals in your immediate area and how they relate to your property with its unique characteristics – both pros and cons – for prospective tenants.

Rental figures often cited in the media are based on median asking rents for properties listed on the Trade Me Property advertising service, while the government’s tenancy bond data measures the average rent of actual bonds lodged by private landlords with MBIE (Ministry of Business, Innovation and Employment).

MBIE’s Tenancy website explains the whys and wherefores of the two data sources, noting: "Neither of these series measures rent paid by all tenants. Rather, they only capture the weekly rent for new rentals on the market."

Tenancy bond data measures the average rent of actual bonds lodged by private landlords with MBIE, thus presenting a measure of the actual price of newly acquired

rentals. Under the Residential Tenancies Act (RTA), every landlord that receives a bond is required to lodge it with MBIE, unless it’s a tenancy specifically excluded under the RTA (e.g. holiday homes). There is no distinction between furnished and unfurnished properties in bond data, which can influence the price of rentals.

Trade Me Property’s Rental Price Index shows price changes of median advertised asking rentals rather than the agreed price, meaning its data includes properties that have not yet been rented out.

The key difference between the two sources is that Tenancy bond collects more rentals under $500pw while Trade Me has more listings in the $600pw bands.

Reasons for the differences include:

  1. A significant volume of rental turnover in the lower price range of $200-$500pw which are not listed on Trade Me (i.e. advertised on other media, through word-of-mouth, etc).
  2. The price of bonds lodged not being the same as the asking rent on Trade Me.
  3. Rental properties included in the Trade Me "asking rents" that are not let for reasons including rent too high, location undesirable, glut of supply, etc.

MBIE says the difference is accentuated in Christchurch due to the earthquake and subsequent rebuild programme, which has reduced supply and increased demand. Although short-term rentals for those displaced by earthquake repairs or rebuilds are listed on Trade Me, typically they do not appear on the Tenancy bond data as the landlord does not ask for a bond. Therefore, the Tenancy bond data for Christchurch is more accurate in measuring changes in the longer-term rental market.

Median rent from new bonds lodged and the annual change resulting from it is typically lower than Trade Me data, due to the median value for rents from bonds tending to fluctuate around clusters of $50. This means interpreting changes in median rentals can be difficult with bond data.

Internal research conducted by MBIE suggests that the formula it uses closely tracks median rents and therefore is the best comparison with Trade Me published medians.

Between regions the percentage changes can vary with Trade Me listings showing a lower percentage change in Auckland while Wellington and Christchurch have significantly higher annual changes than bond data.

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