A Tale of 2 Countries: Rents Soar in Australia, as Landlords Fight for Tenants in New Zealand

The Property Council says many Australian cities are heading for a rental crisis, while landlords in New Zealand’s largest city are offering sign-up incentives.

A photo taken on June 16, 2024 shows an aerial view of apartment blocks located in the Sydney suburb of Mascot in Australia. David Gray/AFP via Getty Images

In Australia, a projected shortfall in the number of homes produced under a government building programme could trigger what the Property Council of Australia calls an “affordability time bomb” for renters.

While in stark contrast, New Zealand landlords are resorting to offering grocery vouchers or a week’s free rent in the hope of attracting tenants, and that’s despite new home building consents falling to mid-pandemic levels.

The likelihood of supply constraints in Australia has the Property Council worried, as the government’s plan to build 1.2 million new homes by 2029 is expected to fall short by more than half, 462,000, according to a report it commissioned from Mandala Partners.

New South Wales (NSW) is short by 185,000, Queensland needs another 96,000, Victoria needs 71,000, South Australia (SA) is short by 32,000, and Western Australia (WA) 56,000.

The federal government has tried to boost supply through its $3 billion New Home Bonus program, which allocates funds to states and territories that exceed their targets for building well-located homes, and also incentivises them to introduce reforms to boost construction.

But the Australian Capital Territory (ACT) is the only jurisdiction that could receive any funds, as it is projected to reach its target.

A general view of homes in McMahons Point in Sydney, Australia on May 5, 2022. Brendon Thorne/Getty Images

‘Time Bomb’: Property Council

“Missing the target ... would set off a housing affordability time bomb,” Property Council CEO Mike Zorbas warned.

But if Australia doubles the programme to $6 billion, housing targets could be met, and renters could save between $50 and $130 a week, the report says. Any unspent money could be allocated to future housing supply initiatives.

States and territories could undertake longer-term reforms if the scheme’s duration was extended to seven years and payments were brought forward.

“Boosting housing supply is the only long-term, sustainable way in which we can boost affordability of homes to buy and to rent,” Zorbas said.

A house under construction stands in front of newly built homes at a housing development located in the south-west Sydney suburb of Menangle Park in Australia on Feb. 20, 2025. David Gray/AFP via Getty Images

Greens Continue Call for Negative Gearing to be Scrapped

However, the Greens responded to the report by urging the government to scrap tax breaks such as negative gearing and the capital gains discount and instead invest in social housing.

Negative gearing allows investors to claim deductions on losses, while the capital gains tax discount halves the tax paid by Australians who sell assets owned for 12 months or more.

The party’s housing spokesperson, Max Chandler-Mather, said the concessions worked against renters.

“These deeply unfair tax handouts tilt the playing field in favour of wealthy property investors, inflating house prices and making it harder for renters and first-home buyers to compete,” he said in a letter to Treasurer Jim Chalmers.

The concessions will cost the budget $176 billion in the next decade, Chandler-Mather said, with 80 percent of the capital gains discount tax benefits going to the top 10 percent of income earners.

Better Across the Tasman, But Only in Cities

Meanwhile, the position of renters in New Zealand’s larger cities couldn’t be more different, despite house-building consents having fallen by 24 percent in the year to June 2024, taking them to their lowest level since the pandemic in 2019/20.

There were 33,627 new homes approved in the year to June, down from 44,529 in the year ended June 2023. In 2019, 34,804 new homes were approved.

Despite this, figures released last week by property website realestate.co.nz showed the three most populated regions—Wellington, Auckland, and Christchurch—had the cheapest rent in February.

Average rents in Wellington were down 8 percent to $673 a week compared to February 2024, saving renters an average of $3,016 a year, while in Auckland they were down 4.1 percent to $689, meaning tenants save an average of $1,560 annually.

A general view of houses and apartments in Oriental Bay in Wellington, New Zealand on April 9, 2016. Hagen Hopkins/Getty Images

Spokesperson Vanessa Williams attributed the fall to a high number of rental properties being available.

That’s resulted in landlords in Auckland offering incentives to prospective tenants in the hope they'll sign a lease—anything from $500 grocery vouchers to two weeks free rent.

Data from the website trademe.co.nz shows the number of new rental listings in Auckland in February was up 34 percent on the same time last year, from 8,049 to 10,805. Some listings on the site had reduced their weekly rent by as much as $60.

However, a recent Salvation Army study found rental affordability remains a significant issue for those on low incomes, especially if they are not able to find social housing, meaning they spent 56 percent of their total income on rent compared to around 24 percent for those in public housing.

A detailed analysis found that many small towns had worse rental affordability figures than major cities.

Horowhenua district, in the central North Island, came off worst, with median rent having risen by 56 percent over the nearly five years from October 2019 to July 2024, while over the same period, median income increased by 27 percent.