Interesting article…

House prices soar

 House prices soar as rents stall 
It is the great conundrum of New Zealand’s investment scene and the great mystery of the Auckland economy.

Why has the median house price risen 25 per cent in Auckland in the past two years to more than $620,000, yet the median rent for a three-bedroom rental has risen just 6 per cent to $550 a week?

Why have rents not kept up with prices in a market short of housing and facing a migration boom?

The numbers look even more extreme going back to 2007. Auckland’s median house price has risen 38 per cent since then, while rents rose just 15 per cent.

Surely the laws of supply and demand say rents should be rising much faster? Rents and prices are rising at similarly high rates in Christchurch, which does face supply shortages and demand from workers receiving higher wages.