Rising Tauranga rents put strain on families

The average weekly rent in Tauranga has hit $487 - upping the cost of a roof over your head by more than $2000 a year.

The rental market - one of New Zealand's most expensive - has been described as one where "he who has the most money will win" and experts say low-income earners are struggling.

Social agencies say some families are spending more than 75 per cent of their income on rent, while others resorted to living in their cars.

Read more: Rental crisis in Tauranga causing distress and desperation for those who need a home

CoreLogic senior property economist Kelvin Davidson said average weekly rent in Tauranga was $487 a week, up from $447 one year ago.

Data from the Ministry of Business Innovation and Employment show average median rents in the Bay of Plenty region in the year to November jumped from $381 a week to $445 - adding $3328 to the annual bill.

MP for Bay of Plenty Todd Muller said the amount in extra rent families were paying was not inconsequential.

''It could fill up a car around 30 times, fly a family of four return to Australia, or pay for about 11 big grocery shops.''

Read more: Transitional housing in Tauranga costs taxpayers more than $9 million dollars

According to Trade Me, the most popular rental property in Tauranga for the year was a three-bedroom Mount Maunganui house on Carter St which had 284 inquiries within two days of being posted.

Trade Me Property spokesman Aaron Clancy said Tauranga's rental market continued to be very strong and it was one of the most expensive places to rent in the country.

Tauranga Rentals owner Dan Lusby said it was now offering financial advice to some of its tenants who were struggling to pay rent and had clocked up arrears.

"Sadly this is happening in the low socio-demographic areas to people who can least afford it."

Lusby said it was an emerging trend.

The business had lost about 40 properties this year. The owners sold them after new government regulations kicked in and rental returns fell to about 3 per cent, Lusby said.

Simon Anderson, managing director of Realty Group, which operates Eves and Bayleys, said there had been a lot of development happening in Tauranga, particularly in Pāpāmoa and The Lakes.

He said new rentals located near schools and other amenities were highly sought after.

"They are top-notch and will go for big money.

"That is just the way the market is and they are not going to be the typical houses low-income earners can afford, so it is a challenge."

Investors wanted the biggest returns possible while tenants wanted nice homes, as cheap as possible.

"It's like he who has the most money wins in that game. The bigger amount of cash you have, the better place you can afford which is unfortunate."

Read more: 'Disheartening': Tauranga family stuck in transitional housing

Harcourts Tauranga managing director Simon Martin said rents were rising due to increased demand from people moving to Tauranga.

"If more houses were built and available for rent then rents would not be climbing as fast.

"Bank restrictions for lending on investors and a lack of available development land are both factors that are driving up rents.

"If we could sell more properties to investors there would be more houses available for rent, which would curb the rate that rents are currently increasing by."

The average four-bedroom home in Mount/Pāpāmoa was renting for mid $600s per week, and in Tauranga for $550 - $600 per week.

Harcourts managed about 900 investment properties in the city, with the portfolio steadily increasing year-on-year, he said.

Papamoa Family Services financial mentor Kathy Young said some of its clients were spending more than 75 per cent of their income on rent and others had resorted to living in their cars.

"We have clients who are in shocking rentals but will not complain as they have accepted a reduced rent for a sub-standard rental and fear being evicted."

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