Out-of-towners on hunt for houses

TAURANGA'S heated rental market is attracting increased inquiries from out-of-town investors on the hunt for properties - and average weekly rents have risen about 6 per cent in the past seven months, industry leaders say.

Tauranga Rentals owner Dan Lusby said he was fielding about 12 rental appraisals a week, driven by low listings and good returns for landlords.

Buyers were from other regions, with 40 per cent considering new builds, he said.

Mr Lusby estimated 12 months ago Trade Me averaged about 300 listings per month for Tauranga city, but this had fallen to 250.

"It's dropped dramatically so inquiries are strong and picking up again," he said.

The company rented a house in about two weeks and received on average 30 applications for each one but "we get hundreds of applications all the time".

In the past seven months, rents had increased strongly, he said, and demand continued to outstrip supply.

BOP Rentals owner Gary Prentice said inquiries from investors looking at apartments or new homes had jumped in the past three weeks. In the past six months, he had done a lot of rent increases with properties that were rented for $320, going up to $350, he said.

Ross Stanway, chief executive of Eves and Bayleys Real Estate, said strong activity across all aspects of the property market and increased migration to Tauranga were contributing factors.

"On one hand there has been an increase of investment properties coming into that rental pool that in some cases is driven by investors. "It is almost a side-effect of the Auckland inquiry, where some buyers are not quite in a position to move down here and live but they do want a stake or foothold in our real estate market because of where it's heading."

However, another aspect was people intent on living in Tauranga but wanting to rent first and look around before they "seriously start looking to purchase and that has added to tenant demand".

The situation was likely to continue for "some time yet" which could make it difficult for prospective tenants, he said.

Harcourts Tauranga managing director Simon Martin said the rental market had turned again after it had "got a bit easier for a while", and investor inquiry was "coming from all over for people looking to invest in this town".

He had noticed a substantial increase in people coming through open homes.

"That is not dropping off at the moment so that would indicate to us the market is strong for the foreseeable future."

Meanwhile Tauranga Property Investors Association president Grant Harris said it fielded about six new membership inquiries a month.

But with house prices increasing faster than rent increases, it could become harder for investors to find suitable properties that meet their rental return investment criteria, he said.

"There are fewer rental properties on the market which is in accordance with the typical trend for this time of year but the numbers are still down on last year. Contributing factors to the reduced stock of rentals include houses bought by owner-occupiers and also existing tenants staying on for longer taking stock off the market."

Mr Harris said while "we are seeing investors from out of town, if they are true rental investors, that should be making more rental stock available".

A Trade Me spokesperson declined requests for its rental figure listing.