A rental website shows prices in Queenstown plummeted by more than a quarter in June compared with the same month last year.
Queenstown-Lakes District had its biggest annual drop in seven years, to an average weekly rent of $550 in June, dropping $210 (28 per cent) compared to the same month last year, according to rents advertised on TradeMe.
"This is the largest annual percentage drop we've seen in the district since we started recording rental data," TradeMe property spokesman Aaron Clancy said.
"With our borders closed, areas like Queenstown Lakes, which rely on tourists and visitors, have been hit hard by Covid-19 and now we're seeing this impact the rental market.
"For the first time in a long time, Queenstown Lakes is a tenants' market, with falling rental prices coupled with the increase in available properties."
Clancy said the number of properties available to rent in Queenstown-Lakes rose 152 per cent in June 2019, meaning tenants had plenty more options to choose from.
Rents in a number of neighbouring districts also experienced an annual drop. In Wanaka, the median weekly rent dropped by 13.5 per cent year-on-year to $550, while Central Otago saw a decrease of 12 per cent to $435.
Demand for rentals rises nationwide
While the supply of rental properties is increasing in many places, demand is up across the country as well, with the number of enquiries on rentals up by 16 per cent nationally.
Overall, the average national rental prices advertised on TradeMe rose by 2 per cent, which TradeMe put down to the rising number of New Zealanders moving home from overseas.
The national median weekly rental price was $510 in June.
The median weekly rent was $570 in the Auckland region and $550 in the Wellington region in June.
Nationwide, the number of properties available to rent in June was up by 6 per cent when compared with June last year.
Regions in the South Island appeared to be seeing the biggest rise in the supply of rental properties, with the West Coast up 75 per cent, Otago up 26.6 per cent, and Southland up 24 per cent year-on-year.
"We believe there are a few factors at play here - the dip in tourism and resulting job losses, landlords moving short term accommodation on to the long term market, and people moving regions to find work," Clancy said.
"Many parts of the South Island rental market are in flux and are going to take some time to find the new normal."