Escalating rents and a lack of properties are making it impossible for some families to find a home - a factor fuelled by the booming economy, experts say.

The average price of a three- to four-bedroom rental property in Tauranga is now $115 per week or $5980 a year more than 2013, new figures show.

Data from Trade Me reveals in April 2013 the median rent for a three- to four-bedroom home was $360 compared to $475 in April 2016.

Over the same timeframe one- to two-bedroom homes had also jumped from $290 to $360 or $3640 more a year, while apartments soared from $385 to $475 or $5200 more a year.


Data from Infometrics and commissioned by Priority One shows Tauranga's economy grew by 3.5 per cent over the year to March 2016 and outperformed the rest of the country on 10 out of 11 indicators.

But at the end of 2015, Tauranga's mean annual earnings were only $49,780 compared to the New Zealand average of $54,230.

CoreLogic statistics also show rapidly rising property values had climbed on average by $111,215 to $591,942 in one year.

Tauranga Rentals owner Dan Lusby told the Bay of Plenty Times it was the strongest he had seen the market in 24 years, with some rental houses classified in the affordable bracket being sold up.

"Sales are quite strong in Tauranga so it is forcing people out of their homes ... you could argue there are less rentals available at the bottom end because your first-home buyers are moving into them."

Landlords could pick and choose and were not going to take on a family with a bad credit rating. The main criteria was a good credit rating, references and clean background, he said.

"We are dictated to by some of our owners on what type of tenant they want, like they don't want children or a couple with one car or, even though it might be a big house, they still only want a working couple with one kid.

"It's because it's a $300,000 to $500,000 investment and we have to abide because they have every right to say who they want in it."

Tauranga Rentals on average put the rent up every six months by $50 or $30 for sitting tenants but some landlords would rather have a good tenant than a rent rise, he said.

However, when those tenants moved out, a house rented for $300 could move to a market rent of $420, he said.

Tauranga Budget Advisory Service manager Diane Bruin said bad credit was a major barrier.

"When a group of 30 people turn up to view a rental naturally the landlord is going to accept the person with good credit rating and references.

"We are working with clients to address bad credit and in some cases clients join our Total Money Management programme which enables landlords to have confidence that rents will be paid. Unfortunately we also don't have enough Housing New Zealand homes in the greater Tauranga area to meet the demand."

Rentals BOP owner Gary Prentice said the company had lost 10 per cent of its rental portfolio as landlords cashed in on the property market.

"We have lost a huge number, probably 10 per cent of our portfolio ... it has had a big impact. All those tenants were looking to rent on top of the other ones already out there."

Ross Stanway, chief executive of Eves and Bayleys Real Estate, said it was logical weekly rents would rise in tandem with increasing house prices.

"There is an increasing number of people buying homes to live in them, taking some rental properties out, and an increased number of people coming here to join the labour force. So they are adding to the pressure of the housing and rental market - and the results of that is some people that are really finding it a struggle to find somewhere to live."

However, unlike some other regions, there was increasing building supply in Papamoa East, The Lakes and Omokoroa and "that is one factor that will limit the extent to which house prices increase".

Priority One projects manager Annie Hill said the city began its recovery from the Global Financial Crisis in 2012 with an increase in construction and building consents.

However, it had accelerated in the last 18 months and "has been joined by strong job growth as a result of businesses expanding and new businesses moving here".

But the rapidly expanding property market and rising house prices were already impacting on people on low incomes and could also affect the business community, she said.

"If employers have difficulty recruiting staff because they cannot afford to live here, this will impact negatively on productivity."

It was also unfortunate that Tauranga's mean annual earnings were still less than the national average, she said.

"That tends to reflect the pay-off that people are prepared to make to live somewhere with such a great lifestyle and a lower cost of living compared to, say, Auckland. The job market is all about supply and demand, so employers will pay what they need to pay in order to secure the skilled and unskilled staff that they need."

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CoreLogic senior research analyst Nick Goodall said that in the last quarter of 2015, 29 per cent of houses sold were to Aucklanders that moved to Tauranga, up from 13 per cent in 2012.

According to its data, investors accounted for 42 per cent of sales in the first quarter of this year with Aucklanders making up 10 per cent of that while first home buyers accounted for about 16 per cent of purchases compared to 21 per cent nationwide.

During 2015-2016 the average Auckland mover cashed up by $285,000 as they downsized in Tauranga, he said.

Meanwhile property sales hit 4761 in 2015 - up 35 per cent on 2014 volumes and more than 5000 sales were expected in 2016.

Tauranga Property investors Association vice-president Simon Darmody said new investors were entering the market and giving new life to the rental pool.

Investors provide homes for people who did not want a long-term commitment to a property and the average yield was from 3 to 6 per cent, he said.

The Residential Tenancies Act allows rents to be reviewed and increased every 180 days.

"Investors have been increasing rents lately to recoup costs of increased rates, insurance and maintenance. "