Rising rents 'grim news' for tenants

There are not as many rental properties in the Bay compared to last year.

Hawke's Bay renters are being hit by rising property prices, according to new figures.

Trade Me's January property index showed the median price of a Hawke's Bay rental property increased from $300 per week in January 2014 to $320 last month.

Quinovic Hastings principal Ross Davidson said he had seen slight increases in rental prices - but not as much as $20 a week.

"Last year, there were 190 Hastings rental properties on Trade Me at this time, now there's 130. That probably accounts for the increase."

Loan-to-value ratio restrictions had contributed to the growing demand for rental properties, he said.

"The restrictions have meant young people are taking longer to get into their first home so there's more people out there wanting to rent."

Rising costs for landlords were another factor, he said.

Mr Davidson expected rents to continue to gradually increase as more people returned home from Australia or migrated from Auckland looking for more reasonable priced homes.

Nationally, weekly rents rose nine per cent year-on-year to a median rent of $420 a week.

Head of Trade Me Property Nigel Jeffries said the rental market was "sparking into action" after a stable and relatively quiet 2014. "The nine per cent year-on-year increase in January is the largest single month rise we've recorded over the past five years. Median weekly rents clicked up $20 per week between December and January to a record high of $420 per week. That's grim news for tenants."

The increases were due to landlords wanting better returns on their investments, Mr Jeffries said.

"It was more a question of when, not if, landlords were going to start recovering some level of yield. It looks like that signal has flowed into the market this month and started to sting tenants in the pocket."

Rents for five-bedroom homes were up 7.7 per cent year-on-year to a record of $700 per week. Rents for medium-sized homes were also strong, Mr Jeffries said.

Only Gisborne and the West Coast recorded falls in median weekly rent.NZME.