Wages rises and number of houses available biggest influences on rents

The joint paper by the Housing Technical Working Group, Ministry of Housing and Urban Development, Treasury and the Reserve Bank shows wage rises and the number of houses available are the two key drivers of rents at both the national and regional level. This has been consistent over the past 20 years.

Authored by Alan Bentley, Enzo Cassino and Nam Ngo of the Housing Technical Working Group, the link between rents and the number of people in each home could occur for several reasons, such as, rents tend to rise when there are not enough houses to go around, or that renters tend to share accommodation more when rents rise.

“Rents matter since low-income households have little discretion over how much they must spend to put a roof over their heads,” the authors say.  “Renters typically earn less than homeowners, spend a greater share of their pay on housing, and are less wealthy.”

For example, between the second quarter of last year and the third quarter of this year, rents increased broadly in line with wages, but faster than inflation. New tenancy rents increased a cumulative 83%.