"The market has been simply unaffordable for a long time now and tenants are becoming more cautious of taking on properties at prices they cannot sustain.
"The cost of living has blown up and tenants are taking the opportunity to be more selective of what they are getting for their money."
Okeremi said the Healthy Homes standards had shown tenants they should expect to live in warm, well-maintained properties and this was now what they wanted.
"They are no longer just taking what they can get."
Okeremi expected prices to keep falling.
She said landlords did not usually drop rents based on market trends but if tenants started to relocate to chase cheaper rents landlords may be forced to lower prices to compete.
Homeowners with larger portfolios were stepping back from buying new properties and instead were putting money into existing investments in a bid to keep good tenants paying current market rates, she said.
"We are seeing more people who are struggling to sell turning to the rental market.
"Many are not willing to revisit their selling expectations so they are choosing to tenant them instead and either leave them on the market with tenants in place or remove them altogether."
More tenants were willing to live in properties that were for sale, confident they would not have to be given notice soon, she said.
Rotorua Rentals director Pauline Evans. Photo / Andrew Warner
Her comments come after a property expert predicted rental prices could "tumble" if demand continues to fall and supply rises.
Trade Me Property sales director Gavin Lloyd said supply for rentals in the Bay of Plenty increased by three per cent compared with May 2021, while demand dropped eight per cent.
Lloyd said the trend could foreshadow a significant shift in the market, which had seen consistent price rises in recent years.
"We may well see prices tumble as landlords look to fill their rentals in a less competitive market."
Rotorua's median weekly rent climbed $30 last month to $530 - recovering a loss from the previous month.
Tauranga rents jumped to a record $640 and the Bay of Plenty region's median was steady at $600 for the third month in a row.
In the past five years, Rotorua rents have climbed $170 on average, $140 in Tauranga, and $130 in the wider Bay of Plenty. The overall price rise in 2022 so far, however, was $40 for Rotorua in total and $20 for Tauranga.
Rotorua Rentals director Pauline Evans said the rental market was changing and tenants resisted paying "over the odds" for rentals.
"Until recently, applicants would just about agree to any rent - now they are being more cautious."
Evans said there had been high demand for properties close to town as the prices of food, transport, petrol and schooling rose.
"There are some tenants who are willing to make a move to try and reduce their costs."
Changes to the Residential Tenancies Act meant tenant selection had become even more crucial and slowed the process, she said.
The process of selecting tenants had slowed due to Residential Tenancies Act changes, but Evans had not seen a decrease in inquiry rates from renters.
"I have been busier with owners who have decided to pull their houses off the sales market to rent them out.
Rental_rises_OL
"This does cause further concern as we know this is going to create a false economy. As soon as the sales market bounces back, as we know it will, then these owners will sell."
Rotorua Property Investors' Association vice president, Nick Gentle. Photo / Supplied
Rotorua Property Investors' Association vice-president Nick Gentle said the city's rental market was still "very tight".
Property managers were still inundated with applications for sensibly priced and well-maintained rentals but expensive and poor-quality homes were taking longer to rent, he said.
Gentle said Rotorua's rental supply "would appear to be contracting" as property owners sold up due to the loss of interest deductibility and the removal of 90-day no-cause termination.
A flood of new rental housing was unlikely in the current building and finance environment, he said.
Gentle said now was the time for landlords to ensure their properties were in good condition.
"If demand for rentals does decline then tenants will move from a poor property to a good one for the same rent."
Rotorua Budget Advisory Service manager Pakanui Tuhura said with so many families in emergency housing in Rotorua there was high demand - and cost - for suitable family-sized rental properties.
He said some clients were sacrificing meals or sharing food costs with family to ensure they could keep paying rent and not end up on the street.
"Some are using debt such as overdrafts to pay for rent while others seek additional ways to make more income such as taking on additional part-time jobs."
In his opinion, any "tumble" in rental prices will be heralded by a big drop in property sales values, which had not happened yet.
He put the downturn in rental demand to homes being unaffordable and tenants who could pay staying loyal to their landlord.
"Over the last six months, landlords have been able to be very selective ... and they want to keep those tenants, given the fact that if rental costs do tumble then tenants will look to upgrade to better quality accommodation for [a lower cost]."
Comments