Rotorua's median weekly rent has climbed $125 in the last four years. Photo / Getty Images
Rotorua's median weekly rent has climbed $125 in the last four years. Photo / Getty Images
Rising rents are pushing family budgets to the brink, with some struggling tenants being priced out of their homes or turning to the foodbank to make ends meet, a budget adviser says.
Rotorua's median weekly rent has climbed $125 in the past four years to a record-breaking $500.
Rotorua BudgetAdvisory Services manager Pakanui Tuhura said the rising cost of rents would put more pressure on household budgets and people might have to seek cheaper accommodation if they couldn't afford their current rentals.
"As the house sale market stalls, landlords will be wanting to maximise the profits from their rental properties to combat the rising cost of living's impact on their relative profits.
"For tenants, the hard choices of how to spend their household income has become even harder."
Tuhura said in the past few months clients had been trying to reorganise their already stretched household budgets to accommodate steeply rising rents.
"Most want to stay in their current accommodation and are finding ways to be able to afford it, but the reality is that appropriate increases in household income or wages is the only way for them to continue to meet a cost in the long term that is already disproportionate to their other needs.
"We have seen a number of people who, due to increased rental price, are now accessing foodbanks and other options to feed their households who previously were able to afford it within their budget."
Slowing supply and rising demand for rental properties are putting pressure on the city's market, driving rents to record high prices, experts say.
Trade Me's latest February Rental Price Index showed Rotorua's median weekly rent jumped from $375 in 2018 to $500 in 2022 - $35 more than $465 last year.
Trade Me property sales director Gavin Lloyd.
Trade Me property sales director Gavin Lloyd said the region's rental market supply dropped 20 per cent from February 2021 to 2022 but demand jumped 2 per cent.
"Slowing supply, paired with increased demand, is putting pressure on the market and driving rents up in the region."
The number of Rotorua rentals dropped 30 per cent year-on-year, with demand also dropping 13 per cent.
Lloyd said the rising cost of living would be taking a toll on tenants.
Many regions saw rents hit a new high, with Bay of Plenty (up 6.4 per cent year-on-year to $585), Northland (up 9 per cent to $545) and Taranaki (up 22 per cent to $550) reaching a new record.
"In the past 12 months we've seen rents rise consistently and every month it gets more expensive to rent a property in New Zealand.
"Add to that the rising cost of food and fuel, and tenants are having to dig deep into their wallets to pay for everyday necessities."
Rotorua Property Investors Association president Sally Copeland.
Rotorua Property Investors Association president Sally Copeland said it was significantly more challenging to find a rental home.
Copeland, who also owns New Zealand Homes Loans and Insurance Rotorua, said the main reason for record-high prices was a supply shortage of houses to rent.
Changes to the Credit Contract and Consumer Finance Act, Residential Tenancies Act, Healthy Homes Standards, rising interest rates, and the inability to claim interest as a deductible expense have made it difficult for investors to buy houses for tenants to rent, she said.
"Unfortunately these costs do eventually get passed on to the tenant," she said.
"Some property investors have left the market and redirected their finances into alternative asset classes."
McDowell Property Management Limited property management team leader Aisha Okeremi.
McDowell Property Management Limited property management team leader Aisha Okeremi said more first-time landlords were upsizing to accommodate growing families and holding on to family homes as investments and renting them.
"These are your everyday working people with mortgages to pay."
Many tenants were vacating not by choice but because their homes had been put on the market and they were desperately searching for other rentals, she said.
"Unfortunately, a lot of tenants are feeling that they are looked over for properties because of past history and there are those who feel they are judged and discriminated against based on their personal situations."
There were also "fantastic" tenants missing out for no other reason than there were not enough houses on the market.
Okeremi said renting was now becoming a lifestyle choice as people were not able to buy their own properties.
"We are seeing more and more long-term rental situations."
Rotorua Rentals director Pauline Evans. Photo / NZME
Rotorua Rentals director Pauline Evans said the median weekly rents were "eye-watering" but $500 wasn't that surprising now and demand for rental accommodation had not waned.
"With fewer houses available for rent, the demand from tenants continues to expose the extreme shortages in our housing stock levels.
"Put simply, demand is outstripping supply. It is this pressure that is, and will continue, to lift rental rates."
Evans said many investors were selling their properties and quitting due to the changes in rules.
"Where are their displaced tenants going to move to?
"It is not a good part of our job having to go and see a tenant to let them know that their property is going on the market, and they will probably have to move.
"Perhaps the only glimmer of hope we see is a slight slowing of the sales market, maybe some of these vendors who cannot get a quick sale may be able to offer their properties to house tenants?"
