A report from Statistics New Zealand has revealed that rising insurance premiums may be the cause of higher rent prices in the June 2019 quarter.
While several factors – such as a stronger demand for rentals – may be driving up rent prices, the report said that instances of landlords passing insurance costs to tenants are mostly to blame.
“There are potentially several factors contributing to the rising rent prices. These factors include strong demand for rentals, as well as landlords passing on to renters increasing costs such as rising insurance premiums,” said Gael Price, consumer prices manager at Statistics New Zealand.
Beneficiary households were most affected by rising rent prices as they spend a bigger proportion of their money on rent than the average household. Their rents increased to 1.2% for the quarter and 2.9% for the year.
“Rent makes up approximately a third of household expenditure for beneficiary households, compared with around a tenth for all households. Therefore, the strong rent rises this quarter affected beneficiaries more than any other household group,” said Price.
For all households, rent prices were up 1.1% for the quarter while 2.7% for the year.
Dwelling insurance and contents insurance prices also increased this quarter, affecting super annuitant households the most and beneficiary households the least, as the former are more likely to own their own homes while the latter are usually renters.
