“Families are drowning” and using an entire income to pay the rent as the Bay of Plenty once again overtakes Auckland as the most expensive rental region. Harriet Laughton reports.
The Bay of Plenty once again has the highest rents in the country as
Bay of Plenty average rent overtakes Auckland as priciest region
More working families with two incomes are struggling to keep up with rent hikes. Photo / 123rf
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Trade Me property sales director Gavin Lloyd said there appeared to be a price mismatch in the Bay of Plenty.
“Landlords are trying to increase prices, but without the demand, the listings are sitting on site for longer. This is leaving a large backlog of more expensive listings hanging around on site, which is pushing that median rent up. We are also moving out of the peak rental season so some of these things are expected to happen, but it looks like the Bay of Plenty region is particularly impacted.
“It’s unsettling news for renters in the Bay and while we’ve certainly seen sharper rent hikes in the past, this comes at a time when rents are already at record highs,” Lloyd said.
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“It’s no doubt many households will be worried about what this means for their back pocket.”
Tauranga Rentals director Dan Lusby said homes were taking longer to get tenants and that had reduced the rents on some properties.
“For the past 10 years, we would rent a house out within a week of it being marketed. Now it’s taking us at least four weeks and we are having to reduce what we are asking to get a tenant.”
By his estimation, there was an average of 160 rentals available every day in April in Tauranga, but that number had swelled to 340 by the end of the month.
He said rents were still high, but on average he estimated increases had slowed from 9 per cent a year to 6 per cent.
Tenants were not shifting due to the cost of moving and the rising cost of living, and this had contributed to a drop in rental applicants per property from about 20 to five.
Co-owner of iRentProperty Carrie Abbott said tenants and landlords were “struggling”.
“There’s a lot of hurt. Climbing interest rates and council rates have really had an impact.
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“The cost of living for tenants is also really hard and even a small annual increase is hard to bear.”
A lot of rental properties could hit the market in July, she said, “when the bright-line test rules mean it will be easier for some landlords to sell”.
“It will be an interesting time to work in property management.”
Abbott said more than one of her tenants had taken on a boarder and she had heard “a few heartbreaking stories from older, single people that really tug on the heartstrings”.
It was fielding more than 30 applicants per rental property, which was less than 12 months ago, while house rentals of $700-plus had experienced the biggest decline.
Tauranga Property Investors Association spokeswoman Juli Tolley said there was “a lot more inventory available to applicants”.
“There are still a lot of applicants, but the quality applicants are getting multiple offers, giving renters more choice.”
Low-priced and pet-friendly properties were receiving up to 45 applications, while short-term and higher-priced accommodation was getting only “a handful”.
Higher-priced properties were having to decrease in their advertisement to meet the market or sit longer on advertising, Tolley said.
Many landlords were still struggling with interest rate increases as their loans matured and came off the lower rate of 2 per cent to 4 per cent, and were now 7 per cent.
“That, combined with the ever-increasing insurance rates, land rates increases and maintenance costs, has forced rent increases to cover costs.”
Rotorua Property Investors Association vice-president Luke Van Den Broek said there was interest in every property listed and the rents were still quite high.
“With more landlords putting rental properties on the market, we are finding more tenants being pushed to find a new home. The changes to interest rates and insurance premiums have a negative impact on landlords as the pressure to earn enough rental income as well as maintaining repairs is high, which has led to the sale of many investment properties.”
Since last month it had found more properties available for tenants as Airbnb rates were looking to rise.
“This brings more availability to the tenants but less demand for landlords’ rentals and as there is more available, we have seen the prices begin to plateau.”
‘Families are drowning’
Bay Financial Mentors general manager Shirley McCombe says “families are drowning” under the pressure of cost-of-living increases.
The service was working with more clients and although incomes had increased slightly, they had not kept up with the cost of living.
“We are seeing more working clients, even families with two incomes can struggle when rent can consume one entire income.”
Rotorua Budget Advisory Service manager Pakanui Tuhura said many households on fixed incomes could not keep up with rising costs and were sacrificing other expenses or savings, moving to a low repayment mortgage, sharing the cost with others or increasing the household income.
His advice was to book an appointment with a financial adviser while there were still lots of options.
Harriet Laughton is a multimedia journalist based in the Bay of Plenty.
