Tauranga rental crisis looms

GETTING IN: Prime Rentals principal Steve Warburton says there has been an overwhelming number of rental applications over a short period of time.

Tauranga's deepening rental shortage has been labelled a "looming crisis" following the release of figures showing demand for accommodation continues to outstrip supply.

Trade Me figures released this week show the supply of available rental properties dropped by 18 per cent to 2465 listings in the October-December quarter.

However, demand for rentals ballooned by 17 per cent for the same period and the average weekly rent jumped by 18 per cent to $405.

Bay real estate agents attribute the shortage to the city's rapid growth as well as the Reserve Bank's restriction on loan-to-value ratio (LVR) lending, which has forced many potential first-home buyers to continue renting.

Prime Rentals principal owner Steve Warburton said many would-be renters were desperate for accommodation.

Prospective tenants were signing up to rentals they had not personally viewed and landlords were signing them up without meeting them, he said.

"Things are getting desperate."

Mr Warburton said that in the past two weeks their website had attracted more hits for rentals than at any other time over the past two years.

People were aware of Tauranga's rental shortage and wanted to get in before school started.

Mr Warburton said the drop in supply was mostly caused by housing not keeping up with population growth.

"There's a crisis looming," he said.

In November, when the Bay of Plenty Times Weekend first reported on the shortage, there were 320 rentals listed on Trade Me.

As of Wednesday this week, there were just 270 - and only 217 when baches, carparks and garages were removed.

Josh Fitzgibbon, of Tauranga's Be Home Realty, said renters from Auckland, Hamilton and Australia were offering to take properties sight unseen, and in some cases offered about $40 more than the advertised weekly rent.

Mr Fitzgibbon resorted to holding multiple-view open homes, where several suitable renters would show up.

Demand for popular but limited Mount Maunganui and Papamoa rentals was especially crazy but Pyes Pa had the biggest growth in terms of demand, he said.

The worst problem was that rental supply was not increasing, because the property market was still too heated for landlords to invest in rental properties, he said.

Tauranga Harcourts franchise owner Max Martin said the Reserve Bank's restrictions on LVR lending had caused huge problems with rentals.

"First-home buyers aren't buying, so they are staying in their rentals."

Ross Stanway of Realty Services, which operates Eves and Bayleys, said a high number of families were moving to Tauranga for work, looking for three to four bedroom properties, which was driving up demand.

Tauranga Rentals principal Dan Lusby said demand was always high in summer, with people getting in before school or work began.

"It's the same sort of demand but our stock levels are down," he said.

Trade Me acting head of property Jimmy McGee said one of the key drivers of the rental market might be the Reserve Bank's new lending restrictions on high-risk, low-deposit home loans.

"As the [lending restrictions] lock potential house owners out of the market, more people will be forced to sit tight in their rental homes as they keep saving hard for a deposit."

But he said the bigger driving force might be the improved economic outlook, as higher employment rates and wages would put more money in renters' pockets.