It marks the first time in more than two years of back-to-back falls, Trade Me’s latest Rental Price Index shows.

Trade Me Property’s customer director, Gavin Lloyd, says while any drop is positive for tenants it may have a limited impact after several increases over the past 12 months.

“The reality is rental prices are still $20 higher than they were this time last year and it would need another four months of declines to get back to where rents were then.”

Bond data shows softening

Softening in the residential rental market in July has also been noticeable in the latest bond data from Tenancy Services.

The national median rent for all residential properties newly tenanted was flat at $600 a week in July’s data. Median rents have remained at this level since December, but slightly tipped over that to $608 a week in January before easing back in February.

Many regions also showed a decline in median rents from $5 a week in Wellington region to $20 a week in Gisborne, Hawke’s Bay and Tasman.

Supply outpaces demand

The easing pressure on renters’ pockets comes as supply soars on Trade Me’s website.

Rental listings skyrocketed in July to reach the highest number since 2019, when Trade Me started recording data, and represent an 11 per cent increase compared to June and 46 per cent year-on-year.

Regions driving the high supply include Gisborne, up 124 per cent year-on-year, the West Coast (68 per cent) Hawke’s Bay (63 per cent), Auckland (62 per cent) and the Bay of Plenty (59 per cent).

While there’s plenty of supply, renters in some regions may have a tougher time securing a place, particularly those in Gisborne, Marlborough, Otago and Nelson, where demand is outpacing supply.

Lloyd says in Nelson, for example, demand across June and July was up 23 per cent while supply increased two per cent, making it an increasingly competitive market.

“As rents rise, we see tenants looking to offset the costs by squeezing more people into a property. Sharing rooms and converting living rooms becomes more commonplace, which is one factor likely contributing to high supply,” Lloyd says.

While demand improved four per cent on the month prior it remains 27 per cent down on the same time last year.

A tale of two islands

While the country’s North Island remains more expensive for renters, with the top three spots being Auckland at $680 per week, Bay of Plenty at $670, and Wellington at $650, the year-on-year increases are comparatively modest in the South Island.

The Otago region led the pack with rent increasing 15.9 per cent year-on-year to $620, followed by Waikato at 7.3 per cent, Southland at 6.7 per cent, Nelson/Tasman at 5.7 per cent and Marlborough at 4.5 per cent.

“Rent in Canterbury also hit a new high in July reaching $580, a $20 increase on June 2024, with tenants now paying $30 more than the same time last year.

On the flip side, rent in Manawatu/Whanganui, Wellington and Taranaki recorded no change in the year to July.

Record high for townhouses, larger properties

Christchurch city continues to prove resilient in terms of month-on-month prices recording new highs for townhouses and properties with five or more bedrooms.

Between June and July prices for five-plus bedrooms increased 12.1 per cent to $1,110 per week, a record high. Likewise, townhouses are also commanding top dollar, up 3.7 per cent to $560 per week. Units are also up more than 10 per cent over the same period.

“It’s interesting to compare what we are seeing in Christchurch to Auckland and Wellington. While the two North Island cities recorded falling prices for apartment rentals, Christchurch recorded a significant 8.3 per cent increase,” Lloyd says.

“Wellington also had a 2.9 per cent drop for townhouses, which stands in stark contrast to the record prices for the same type of properties in Christchurch. That said, Christchurch remains significantly more affordable for tenants.”