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Home / Rotorua Daily Post

Affordable rentals in Rotorua 'impossible to come by'

By Carmen Hall & Cira Olivier
Rotorua Daily Post·
31 Jan, 2021 05:00 PM5 mins to read

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There has been a 67 per cent jump in the number of rentals on Trade Me, year-on-year. Photo / File

There has been a 67 per cent jump in the number of rentals on Trade Me, year-on-year. Photo / File

By: Cira Olivier and Carmen Hall

Affordable rental properties "are near impossible to come by" in Rotorua and experts fear the situation will get worse before it gets better.

The news comes hard on the heels of rent hikes which have forced some people into homelessness, a budget adviser reveals.

Data from Trade Me reveals the median weekly rent in Rotorua in December jumped to $460, increasing on the same month last year from $430, and $370 the year before - an increase of 24 per cent over two years.

Rotorua Budget Advisory Service manager Pakanui Tuhura said decent and affordable rent was near impossible to come by, and those who could previously afford their rents were struggling.

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"My concerns are the same as they have always been. Our people need decent accommodation that they can afford."

He said many people are having to make a choice between decent or affordable, not decent and affordable.

Even those who have been able to afford their rent in the past were "definitely feeling the pinch", he said.

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To be able to afford rentals, people were working from home to cut travel costs, getting a boarder, eating less, or moving - to name a few.

Homelessness was forced on to people, he said, and finding, securing, and keeping affordable, good quality accommodation was a priority for many of their clients.

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Rotorua Property Investors Association president Debbie Van Den Broek said an "awful lot" of renovations being done to properties in the city contributed to a "huge" rise in rents in the past 18 months.

"I hope they don't rise any more, I don't know how people manage."

She said with property prices rising, landlords were spending between $20,000 and $50,000 on renovations which were then translated to rent increases.

"There's a lot of landlords doing big renovations bringing them up to healthy homes standards ... modernising kitchens and bathrooms."

Supply and demand also played a role, and many rentals were secured for a new tenant before the other has left, which has been the case for several years.

"I've been really shocked, we've been getting an awful lot of applications, and an awful lot not showing up."

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Simon Anderson, managing director of Realty Group Ltd, which owns Bayleys and Eves, said between 20 and 40 people viewed every rental property, showing a "huge demand" that he couldn't see slowing down anytime soon.

"If a property came up, we'd have someone straight away, on that day ... our job is to select the correct tenant for that property to look after the landlord's assets," he said.

"Sometimes people are going to miss out, that's the hard facts of rentals at the moment."

He said landlords were being "quite responsible" and "looking after tenants" by not increasing rents at the same rate property values had increased over the same time.

Rotorua Rentals director Pauline Evans said in her view the rental market was active and steady with good inquiry levels of interest from tenants and prospective investors.

On average it could receive 10 to 30 applications per property.

A good three-bedroom property could fetch $450-plus in rent but it depends on location and condition of the property.

''I currently have three-bedroom properties advertised for $570 per week which are brand new and tick all the boxes.''

Evans also believed the rental market would stabilise.

''One factor for this is the true employment landscape becoming more visible, we have not seen the end of redundancies, job losses or unemployment increases, this will have a trickle-down effect on rents.''

Meanwhile, Evans said the fairest approach to rental rises was small regular (now annual) incremental increases.

''Owners have been met with increasing costs not only from changes to the Residential Tenancies Act, compliance costs, insurance increases and general maintenance items costing far more to remedy than ever before.

"It is not uncommon for some of our owners to not increase the rent, they appreciate their tenants and recognise that the peace of mind that a happy engaged, loyal tenant offers is worth more than a few extra dollars in the bank.''

McDowell Property Management Ltd business development manager Rhiannon Greenwood said rent prices have been rising steadily since Covid.

The most frequent applications were families who had been kicked out with landlords moving back from overseas.

She feared the rental market could become unaffordable because she did not anticipate the rising price and dwindling supply slowing down.

Trade Me Property spokesman Logan Mudge said nationwide rental supply was up 11 per cent in the year to December.

It was the highest year on year supply increase seen in recent years, he said.

"However, national demand was also up by 13 per cent year-on-year in December meaning we didn't see prices cool off as a result of increased market supply."

Mudge believed the increase in supply was driven by short-term rentals, and accommodation being moved to the long-term rental market due to lower demand with the borders closed.

"We'll be keeping an eye on the market to see if this increased supply has any impact on prices in Rotorua."

The number of rentals listed onsite in Rotorua dropped jumped 67 per cent compared with the same month in the year prior.

The most popular rental last month was a two-bedroom unit for $420 per week on King St with 23 inquiries in its first two days.

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