Infometrics New Zealand Housing Outlook report examines rental levels and trends across various regions of the country over the year to June 2011.
The report says that rental growth in Auckland picked up this year, lifting from 2.7% p.a. in January 2011 to 5.1% by June.
The report cites the rise in rents in Central Auckland - up 5.9% from June 2010 in the fastest growth rate in over three years - for the lift.
"With Auckland's economy improving, the lack of new building in recent years is now starting to show up as tenant demand for accommodation increases."
Trends in the capital have been variable over the past year, but by June 2011 the average rent was just 0.3% higher than 12 months earlier.
Some upward pressure on rents early in the year, however, took rental yields to their highest level is almost seven years.
Unlike most other regions, Wellington didn’t suffer from a significant fall in new tenancy agreements over the last year, suggesting the supply of available rental property remains relatively high.
Average rents in Northland barely changed over the year to June, rising just 0.2%.
The report says the weak economy and labour market combined to restrict landlords' ability to increase rents, however, "with house prices having fallen, rental yields are generally better than the levels that have prevailed since 2005."
The report also claimed that while some Northland property investors may want to reduce their exposure, "a lack of buyer demand is probably seeing many investors maintaining their holdings and waiting for better selling conditions."
Waikato/Bay of Plenty/Gisborne has seen positive rental growth over the last year, with average rents up 2.3% since June 2010.
With house prices largely flat over the same period, there has been a small lift in rental yields, now at their highest level in six years.
"Landlords are likely to be looking to increase rents further over the next year as the region's economy continues to improve," the report said.
The last six months has seen some momentum regained in rental growth in the Hawke’s Bay, reaching 3.4% p.a. in June.
With house prices falling over the same period, gross rental yields have improved to their highest level since early 2004.
The report claims investors may be hoping for more stable prices over the coming year, and are also likely to try and push rents higher as the areas economy picks up.
Rents have increased 4% over the past year, with the report attributing the increase to landlords' seeking to offset the Government tax changes to investment property.
The strongest rental growth was seen in Wanganui, and yields in both Taranaki and Manawatu have hit six-year highs.
However, the rise in rents has been less pronounced in Manawatu, "where there seems to have been less urgency so far to chase higher rental yields."
June 2011 saw average rents in Nelson/Marlborough down 3.1% from a year earlier – the largest annual decline in the region since 1998.
Marlborough saw the largest fall, down 5.5%, which the report says may be a reflection of the tough times being seen in the wine industry and the flow-on for seasonal workers.
However, despite the decline in rents, gross yields remain no worse than a year ago due to house price falls.
Provincial Canterbury/Westland saw a 6.4% p.a. rental growth over the last quarter, reaching its highest level since March 2009.
The report cites the displacement of Christchurch residents for the lift, saying the squeeze on rental stock, “is likely to continue for some time while a significant number of properties in Christchurch remain uninhabitable.”
Rental growth in Otago/Southland recovered to 4.2% p.a. in June 2011, following a period of weakness earlier in the year.
However, the report says that as in other regions, "investors will be conscious of the effect of tax changes on their cash flows and some will be considering reducing their holdings."
The report says Central Otago and Southland is well supplied in terms of rental accommodation, though low yields in Central Otago could translate into "significant" upward pressure on rents in the area over the next one to two years.