According to estimates from BNZ, annual rent inflation across all existing tenancies was virtually zero in September 2026. Rents for newly agreed tenancies have performed slightly better, with annual growth reaching 0.9 per cent. Economists expect this figure to increase to between 1.5 per cent and 2.5 per cent over the next 18 months.
The surge in new rental listings seen last year has slowed. Canterbury continues to experience relatively strong rental growth, while Auckland and Wellington still have comparatively plentiful rental options.
Despite these changes, the cost of renting remains lower than buying a typical home. BNZ estimates that annual home ownership costs now account for approximately 35 per cent of median household income. Renting, by comparison, absorbs approximately 25 per cent of household income.
The narrowing gap reflects lower house prices and mortgage rates over recent years. More affordable purchase prices have also helped first-home buyers enter the market. However, mortgage rates are now expected to rise, potentially increasing repayments and making home ownership less attractive financially.
What This Means for Individuals, Investors or Small Business Owners
Property investors should assess whether rental income covers financing and operating expenses. Individuals saving for a home should consider how interest rates and property prices might affect their plans.
Any Potential Tax, Record-Keeping or Compliance Considerations
Landlords should maintain accurate records of rental income and expenses, and confirm which costs are deductible. Sellers should check whether the sale attracts income tax under the applicable property rules.
Practical Actions Readers May Wish to Discuss with Their Accountant
Discuss mortgage affordability and potential tax liabilities with your accountant before making major decisions. Although renting currently appears cheaper, the right choice also depends on long-term plans and the benefits of owning a home.
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Disclaimer:The information in this article is general in nature and does not constitute financial, investment, taxation, legal or accounting advice. Readers should obtain professional advice relevant to their individual circumstances before acting on any information contained in this publication.
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