People are finding it harder to rent in Tauranga. Photo / George Novak
Renters desperate to get a roof over their heads are taking on properties they can't afford as competition for homes soars.
Returning ex-pats, investors selling up and low stock are driving median weekly rents to record levels.
Tauranga Budget Advisory Service manager Shirley McCombe said demand for the service wasincreasing as more people struggled to pay their rents. There had also been an increase in the number of people receiving debt repayment orders.
Some clients were "so desperate for a house that they will agree to take on a property that they can't really afford but feel they don't have any other options".
Some feared they would lose their home if they could not keep up with their rent.
"Many people will want to cash in their KiwiSaver but if they do not address the issue they find themselves in the same position in a few months' time – minus a chunk of their retirement savings."
Tauranga Rentals owner Dan Lusby said strong demand for rental properties was driving up the prices.
Lusby said there were about 200 rental properties available compared with the city's population of more than 100,000 people.
"That 200 properties is slowly going down. It's not very many."
He said his office was the same, with only four or five properties available for rent but "dozens and dozens" of inquiries.
He said a four-bedroom property for $620 a week was available recently and within an hour his office received about 30 applications.
"It is getting harder for people to find places to rent out.
"It is hard for everybody. People are vying for anything whether it suits them or not."
Lusby said many ex-pats were returning from overseas to their own rental investments kicking out existing tenants because they needed somewhere to live.
In contrast, some returning Kiwis had nowhere to go and needed a place to rent.
More people were also coming to the Bay of Plenty to work.
"The concern is when will it ever end? I don't think it will."
Lusby said there was typically a turnover of renters but more people were "staying put" post lockdown.
"The only tenants we are losing are the ones who have finally bought their own home. They have managed to save some money over lockdown."
Managing director of Realty Group Ltd, which operates Eves and Bayleys, Simon Anderson said he was seeing continued demand for rentals even at the upper end of the market.
However, there was a shortage of properties.
"Any three-to-four-bedroom home is going to have multiple inquiries on it. We are also getting 40 to 50 applications for a new rental.
"There is no slowing in that demand. I can't see that trend in rent increases changing."
Anderson said the demand meant some people were missing out, which was why it was important to present well and have good references.
Post lockdown, Anderson said landlords looking to realise their capital gain were selling their properties, which were being snapped up by either first-home buyers, returning Kiwis or parents buying for their children.
Harcourts Mount Maunganui managing director Nigel Martin said there was strong demand for rentals and a lack of property available for rent was driving up the prices.
Martin said listings for sale were also "historically low" and people who could not find the right home were having to rent somewhere in the meantime.
Tauranga Property Investors Association president Juli Anne Tolley said numerous long-term owners in Tauranga's rental market were selling up due to new regulations and restrictions.
Despite rising rental prices investors were still in the market.
"There are not a lot of options to put investment funds into ... So property is definitely the golden child here but there is a lot of pressure to ensure costs are covered."
Tolley said the rental freeze over Covid-19 lockdown meant some rent increases had been sharper after it ended.
"If they [tenants] have any past history of not paying on time or disruptive behaviour, they will find it even more challenging to secure a private rental due to the recent law changes reducing landlords abilities to manage the situations."
OneRoof editor Owen Vaughan said for a certain group of people low-interest rates were making a more compelling reason to take the plunge from renting to buying.
"Obviously a lack of listings in the market is going to put pressure on rentals because you're going to have a pool of people who are going to have to rent who have sold their houses and are needing somewhere to live."
Trade Me's latest Rental Price Index for August showed the Bay's median weekly rent reached a new record climbing 9.5 per cent to $525 from August last year.
Tauranga was the most expensive in the region in August, with a median weekly rent of $550 - an 11 per cent increase on August 2019.
Trade Me property spokesman Aaron Clancy said the Bay's rent prices had not shown any sign of slowing down since lockdown and with demand outstripping supply he did not expect to see that change any time soon.
Clancy said supply in the Bay dropped 12 per cent in August compared with the same month last year, while demand increased by 3 per cent year-on-year in August.
With Tauranga rental listings accounting for more than half the total number of listings in the Bay, the city's high rental prices played a significant role in pushing up the regional weekly rent in August, he said.
Demand for rentals in Tauranga remained flat when comparing August 2019 and 2020 while supply in the city was down by 15 per cent year-on-year.
"We often see rental prices increase when supply doesn't match demand, which is what we're seeing happen in Tauranga."
Breakdown: Bay's median weekly rents
August 2019 vs August 2020
Median weekly rent - Tauranga August 2019: $495 August 2020: $550 (up 11%)
Median weekly rent - Rotorua August 2019: $430 August 2020: $450 (up 5%)
Median weekly rent - Bay of Plenty August 2019: $480 August 2020: $525* (up 9.5%) *new record
Top tips to budget for rent
1. Knowledge is power
Create a budget, ensure you are receiving the correct entitlements from Work and Income, Family Tax Credits, Working for Families (if eligible), consider additional income options such as increasing hours of work or taking on a boarder.
2. Look at all your expenses.
Investigate where you can save and set money aside each week so you have the funds available when bills arrive.
3. If you have a lot of debt – deal with it.
Seek advice to discuss your options. The more you ignore it the bigger it will get.