The number of available rentals in Rotorua listed on Trade Me plummeted by nearly 50 per cent in a year, with property industry figures saying landlords are selling up to reinvest elsewhere.
“Absolutely astonishing and horrifying,” is how one investor describes the scenario, while another says more properties are being handed over to community housing providers.
A government minister, however, says tenancy bond numbers are up in the Bay of Plenty and nationally, and the best way to improve rental affordability is to increase housing supply — which it is doing.
Trade Me Property sales director Gavin Lloyd told the Rotorua Daily Post Weekend the number of available rental properties in Rotorua fell 49 per cent in July, compared with July last year. This compared to a nationwide drop of 21 per cent.
“Demand in the Bay of Plenty rental market is outstripping supply which is a similar trend we are seeing nationally.”
He said the average rent in Rotorua also increased by $5 per week to $550. The Bay of Plenty average was $660 in July, up $50 on July 2022.
“The cooler months have had an impact with prices relatively stagnant since April,” Lloyd said.
Yesterday there were 35 rentals in Rotorua listed on Trade Me.
Rotorua Property Investors president Sally Copeland said the group was “shocked” to see available rental listings decline so much.
She put some of the drop down to social housing providers taking a wider market share and private landlords selling to first-home buyers or reverting back to Airbnb or short-term accommodation.
A legislation change that prevented most investors from writing off mortgage interest as an expense for tax purposes also meant more “landlords have left the industry and are investing elsewhere”.
“Bonds and Airbnb have better returns on money invested. Returns are now more attractive and the risk is less.”
Copeland said the tax deductibility change meant it was “impossible for mum-and-dad investors to make up the losses out of their wages”.
“Especially with increases in cost of living and interest rates. With all the weather events of recent times insurance companies have increased their premiums.”
Copeland said it would be sad to see mum-and-dad investors ― most with one or two properties ― squeezed out of the market allowing only the big players to remain.
Rotorua landlord Debbie Van Den Broek said the falling number of available rentals was “absolutely astonishing and horrifying”.
“I would now hazard a guess that it is next to impossible to find a rental home in Rotorua no matter what your budget may be. I feel really sorry for any prospective tenants at the moment.”
Nick Gentle, operations manager and co-owner of property investment agency iFind Property, said the rental market was extremely tight, with long waiting lists and a lot of applicants for properties.
He knew of owners selling and said if a property was bought by an investor, or an existing owner had a mortgage, those properties were increasingly being handed over to community housing providers.
“I have lost count of the number of times I heard of renters with jobs who have lost their rentals, because of the Government’s tax settings.”
Gentle said the pessimism around at the moment also made it a good time to buy if you could.
“Personally, I have enjoyed buying run-down houses in down-markets and developing them in the past. History has shown again and again that those who can invest well in any asset class in a down cycle, are rewarded in future.”
Rotorua Rentals owner Pauline Evans said some of its owners had either listed their rental properties for sale or recently sold.
“The increased pressures from tenancy law changes imposed by this Government in a relatively short period has taken a toll on private landlords.”
Evans said most landlords were small-time operators and many had their life savings in their rental.
“If the mum-and-dad investors have any more pressure applied to them they will be squeezed out of the market. I would fear that tenants will be very much more worse off without the influence of mum and dad investors.”
She said there were about 530,000 rental properties in NZ and about 80 percent (440,000) were privately owned.
“Who is going to do it if they get out?”
Carrie Abbott, from property management company iRentProperty, said her clients generally wanted to provide good quality homes with sustainable tenancies but were being forced to raise rents to cover the costs being thrown at them.
“The Government has incentivised landlords who rent their properties to community housing providers.”
She said this had forced a lot of landlords’ hands into following suit, rather than renting to “everyday, hard-working Kiwis”.
“The financial incentive for doing so can make the difference between keeping a property or having to sell it.”
A Ministry for Housing and Urban Development spokesperson said it did not generally support the provision of public housing by community housing providers from the private market as this “does not increase the overall housing supply”.
A Kāinga Ora spokeswoman said there were 764 public housing homes in Rotorua and about 110 new state homes were planned or under construction by the end of June next year.
The Ministry for Housing and Urban Development and Ministry for Social Development, Rotorua Temporary Housing Dashboard for July showed 315 households were living in motels, down from 327 in June.
Nationally, in the three months to June, 24,716 people had applied for state housing compared to 24,080 the three months before. There were 2372 people on the housing register in the Bay of Plenty in June compared to 2366 in March.
The Bay of Plenty had 1644 tenancies delivered by community housing providers and 412 transitional places as of June 30.
The overall number of people in emergency housing in Rotorua was only accessible through an Official Information Act request.
Revenue Minister Barbara Edmonds said the most crucial thing for improving rental affordability was to increase the supply of housing and that was what the Government was doing.
She said since coming into Government, more than 230,000 new homes had been consented, a record number of new dwellings completed, and there was a strong pipeline of housing being built.
The Government was enabling new housing through “massive investment” in pipes, roads and other infrastructure, investing in affordable rentals through the Affordable Rental Pathway.
“The Government has ramped up our direct investment in infrastructure provision, government-led development, and partnerships to deliver more build-ready land and affordable homes.”
Edmonds said data collected by the Ministry for Business, Innovation and Employment showed there were 22,362 active bonds held for rental properties in the Bay of Plenty as of June 2023.
This was an increase of nearly 400 active bonds (396) compared to June 2022, or an increase of 1.8 per cent in the number of bonds collected, she said.
Nationally, the number of tenancy bonds had increased by 4.7 per cent.
Recent research by the Government’s Housing Technical Working Group found wage inflation and the relative supply and demand of houses were the main drivers of rental inflation.
RNZ reported that Treasury chief economist Dominick Stephens said the research found little evidence that interest rate changes, tax changes and inflation got passed through into rents.
Carmen Hall is a news director for the Bay of Plenty Times and Rotorua Daily Post, covering business and general news. She has been a Voyager Media Awards winner and a journalist for 25 years.
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