Average rental prices in Tauranga have hit a new high. Photo / Getty Images
Lockdown-fatigued Aucklanders are snapping up rentals in Tauranga while priced-out local workers are holed up at motels and camping grounds, a property manager says.
Another says a lot of the fresh rental supply is new builds that many renters, including some workers and retirees, can't afford.
Figures from Trade Me show the median average rent last month in Tauranga hit a record high of $600 a week, up from $520 the same month last year.
November rental demand was up 17 per cent and supply down 20 per cent on 2020, and one property attracted 56 inquiries in just two days.
Tauranga Rentals owner Dan Lusby said he continued to field inquiries from good tenants he could not find homes for.
He said locals were moving to motels, trying to hire campervans, staying in camping grounds and living with family or friends.
"They are looking at all alternatives just to get a roof over their heads."
Aucklanders escaping the aftermath of lockdowns were also flocking to Tauranga, putting additional strain on the rental market, he said. Many were used to paying higher rents.
"They just want to get out of there and are taking advantage of being able to work remotely.
"A lot of the time rents in Tauranga are cheaper but it's more than what the locals can afford."
He expected rents would continue to rise in Tauranga due to factors such as job availability, Aucklanders moving, people coming home from overseas and a lack of diversity in the housing stock - including in new builds.
Lusby said the rental crisis was taking a toll on his staff.
"Some people have some really sad stories. It is very emotional and you feel for them but unfortunately, we can't help them. There is just not the stock available."
Tauranga Property Investors Association president Juli Tolley said landlords were cautious.
"Many are evaluating their positions to determine if they need to sell down over next few years to absorb the reduction of interest deductibility."
In her view, returns were not there for new investors and that would continue to have an impact on the market pool.
Those who had decided to invest were mostly looking at new builds, she said.
"The sell-off of existing homes and investment in new builds leaves a gap in rental housing supply for lower to mid-socio-economic renters, people who work, retirees, because the rent is higher for new builds and moving out of their affordability range."
Tolley said it had become "tougher to be a landlord" and most really cared about their tenants.
"You can no longer give someone a chance. The law has become so restrictive that if you get a rogue tenant, it is exceptionally difficult to move them on."
Simon Anderson, managing director of Realty Group, which operates Eves and Bayleys, said there was a shortage of rental properties as demand surged.
Increasing property values meant landlords would look for a return on their investment.
"So you have a demand factor and a return factor which is reflected in the price of rents."
He acknowledged some long-term investors had cashed up but, despite tax deductibility rules and other regulation changes, there were new investors coming to the market.
"They know what they are facing and have accepted that. So we have seen a new crop of investors which is great because they also provide housing opportunities."
Trade Me Property sales director Gavin Lloyd said demand for rentals in Tauranga increased by 17 per cent year-on-year in November, while supply dropped by 20 per cent.
"We're now entering a typically busy time of year for the rental market, and with the added impact of Auckland's border opening up we may see more increases across the board in the New Year."
He said the most popular rental property in Tauranga last month was a three-bedroom house on Pamir Place in Welcome Bay for $600 a week. That property fielded 56 inquiries in its first two days of being listed.
Meanwhile, in Rotorua tenants who had lost their jobs and could not afford to pay their rent were raising new dilemmas for property managers.
Rotorua Rentals director Pauline Evans said the unvaccinated issue had "come to light recently" and was "very stressful for all involved".
Tenants who have refused to be vaccinated were losing their jobs and as a direct result having to leave their tenancy.
"We have had to be extra aware as we are dealing with an emotive unvaccinated person and the possible repercussions that can result."
Evans said one tenant made a decision to vacate the property as "they could see no way to pay the rent moving forward".
"We did not and cannot give a tenant notice in these circumstances. It is a [Tenancy] Tribunal order or we accept notice from the tenant which is what we did.
"As hard as this situation is, the positive is we have another rental available for a new client."
Last month the Ministry of Business, Innovation and Employment said a person's vaccination status was personal information that fell under the Privacy Act.
Building, tenancy compliance and investigations national manager Steve Watson said at the same time the Human Rights Act also prevented discrimination against prospective tenants. It was unlawful not to grant a tenancy to a person due to their race, nationality or disability.
"Disability includes physical illness or the presence in the body of organisms capable of causing illness, this includes Covid," he said.