John is a senior reporter at the Bay of Plenty Times

Renter reluctance sees high-price properties sit

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Tauranga rents have risen almost $4000 a year since February 2014 with the Bay of Plenty being described as "the most dynamic property market in the country without doubt".

A dire shortage of one and two bedroom rentals in Tauranga has added to the problem with huge pressure from people looking for affordable three-bedroom homes.

The most dynamic property market in the country is without doubt the Bay of Plenty, and that applies to both the rental market and the for sale market.
Nigel Jeffries, head of Trade Me Property

Trade Me's latest figures show the median rent in Tauranga hit $425 a week last month, up from $370 at the same time last year and $350 in February 2014.

The difference between the average weekly rent comes to $3900 over a year. The average rent in Tauranga was $60 higher than any other part of the Bay of Plenty, ahead of the Western Bay at $365 per week.

The median weekly rent price for the wider Bay of Plenty was now at $400 a week, making it the fourth most expensive area to rent in the country after Auckland, Wellington and Christchurch.

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Head of Trade Me Property Nigel Jeffries said "the most dynamic property market in the country is without doubt the Bay of Plenty, and that applies to both the rental market and the for sale market".

Senior property manager for LJ Hooker Tess Johnson said rents for a two-bedroom unit had reached the same level as an affordable three-bedroom home had been a year ago.

Ms Johnson said they only had one one-bedroom unit and two two-bedroom units on the books, making it tough on older people looking for somewhere smaller to live, at about $330 a week.

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Tauranga Rentals owner Dan Lusby said they had no one and two-bedroom units. "A lot of people want good quality one and two-bedroom homes but they are not available."

People were being forced into paying higher rents for a three-bedroom home that they did not really want.

This added to the already strong demand for affordable three-bedroom homes, he said.

Hardly any smaller brick and tile units had been built since the 1970s because developers had sought the bigger returns from building three and four-bedroom homes. This was despite half of New Zealand's population now comprising people who lived by themselves or as couples, he said.

The current average price differential between a two and three-bedroom home ranged from $45 a week in Tauranga Central and Greerton to $83 in Papamoa - averaging $68 across the city.

Mr Lusby said it was rare for people that wanted three bedrooms to settle for a smaller house because of affordability. It cost a lot to move house and people did not want to shift into a place that they knew would be unsuitable.

There were also issues of overcrowding for landlords.

The unsatisfied demand from people wanting smaller homes combined with those seeking affordable three-bedroom homes meant these properties continued to be snapped up virtually as soon as they hit the market.

A noticeable trend for both rental agencies was the rise in the number of higher-priced rentals sitting longer on their books. Mr Lusby had 270 properties available to rent compared with 170 a couple of months ago, but more than half started at $500 a week. "We are getting the same number of inquiries but the rents are going up."

This was a change from the days when they were only getting a handful of listings a month from landlords wanting more than $500. "It makes it very hard on tenants to pay $500 a week."

But despite the pressure on housing, Mr Lusby said it was rare to get someone coming to them desperate for accommodation. If they trawled the internet as soon as they got their six weeks notice to move out, they would find a place.

However the shortage of affordable rentals meant there were still a lot of good tenants looking for a place to live, he said.

Dan Lusby
Dan Lusby

At 6pm on Thursday there were 55 rental properties listed in Tauranga for between $400 and $450 a week. Most of the properties listed for between $400 and $425 were for two to three-bedroom homes. Ms Johnson said it was about supply and demand and if supply was down then prices went up, but the market had reached the point where people could not afford the higher prices. She had more properties to rent because quite a few of the higher priced ones were sitting for a while. Overall, inquiries had eased off in the past month.

Group sales and marketing manager for Eves and Bayleys Karen Worley said there had been a slight easing of inquiries, with some higher end properties sitting a little longer than before.

Of the 20 properties currently available, three had one or two bedrooms. However if people looking at this end of the market could not get what they were looking for, they grabbed whatever else was available, she said.

There had been an increase in rents from owners listing their properties at the higher end of an appraisal.

- Bay of Plenty Times

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