Landlords Urged to Negotiate Rents Amid Falling Market Rates

Landlords in New Zealand are facing increasing pressure to negotiate rental prices as the housing market experiences a notable decline. Housing policy expert Stuart Donovan, along with his partner, recently decided to move after their request for a rent reduction was denied. They are now relocating to a property in Berhampore, which they secured at a significantly lower rate of around $400 per week less than their current home in Island Bay.

Donovan, an economist at Motu Research, noted that he was surprised to experience the rental market’s downturn first-hand. After living in their Island Bay residence for a year at a weekly rent of $1,250, he sought a reduction of $50 upon their lease renewal, only to be met with refusal. “We said would you be able to consider the rent in line with market conditions but their answer was no,” Donovan explained. As a result, the couple began searching for alternatives, eventually finding a new rental that offered better value.

The situation reflects a broader trend in the rental market. According to data from realestate.co.nz, the nationwide average weekly rent has fallen by 2.4% to $626 per week. In Wellington specifically, rents have decreased by 8.4%, bringing the average down to $663 per week. As of December 2025, the number of available rental properties rose by nearly 20% year-on-year to more than 5,000, with Wellington experiencing a staggering 91.5% increase in rental stock.

With the current rental market oversaturated, many landlords are now left with properties that they are unable to fill at previous rates. Donovan pointed out that the Island Bay property is now listed for $1,100, a clear indication of the shifting market dynamics. He remarked, “They refused to negotiate and now have to re-let the place, and there are costs associated with that.”

The economic landscape in Wellington is also shifting, leading to a potential demand shock as public service cuts impact the local economy. Donovan highlighted the introduction of a new district plan aimed at increasing housing availability, which has led to a rise in building consents by 79.5% in the year to October 2025, according to Wellington City Council data.

While landlords have the right to increase rents annually, many are adjusting prices in response to current market conditions. Luke Somervell, president of Renters United, emphasized the importance of negotiation. “It’s a tenancy agreement and open to negotiation between two parties, but there’s not a culture of that,” he noted. He acknowledged the fears tenants may have about requesting rent reductions, especially in light of recent rollbacks in renters’ rights.

The reality is that tenants have options under the Residential Tenancies Act, allowing them to petition the Tenancy Tribunal for a rent adjustment based on market conditions. Nevertheless, many renters remain hesitant to exercise this right, leading to a stagnant rental negotiation culture.

As the rental market continues to evolve, landlords who fail to adapt to changing dynamics may find themselves at a disadvantage. The ongoing increase in rental listings is likely to afford tenants greater choice and bargaining power in the coming months. With the economic outlook uncertain, both tenants and landlords will need to remain vigilant and responsive to the shifting landscape.