Hope for tenants as rental market shifts
Property manager sees first price drops in years in Rotorua
Rental market shifts are putting more power in tenants’ hands, with one Rotorua property manager seeing the first price drops in years. A drop in house sales is believed to be contributing to a rise in rental listings as homeowners struggling to sell rent out their properties instead.
And landlords no longer inundated by applicants willing to pay asking price are being advised to invest in keeping good tenants loyal.
Professionals Mcdowell property management team leader Aisha Okeremi said properties in Rotorua were not being rented as quickly. She had seen price reductions in unit and townhouse-type properties in the Victoria/central area of town.
“That’s not to say it’s more widespread than that, there are properties throughout many areas that have seen reductions and also longer vacancy periods.”
Property managers were now taking care to place good tenants quickly before they go elsewhere.
Okeremi said those “overpricing” their rental properties would find similar properties were snapped up while theirs sat vacant.
“The market has been simply unaffordable for a long time now and tenants are becoming more cautious [on price].
“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, wellmaintained properties and this was now what they wanted.
Okeremi 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.
Property investors 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.”
Her comments come after a property expert predicted rental prices could “tumble” if demand continues to fall and supply
rises.
Me Property sales director Gavin Lloyd said supply for rentals in the Bay of Plenty increased by 3 per cent compared with May 2021, while demand dropped 8 per cent.
The trend could foreshadow a significant shift in the market, which had seen consistent price rises in recent years, he said.
“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 back to a record $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 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, and schooling rose.
Changes to the Residential Tenancies Act meant tenant selection had become even more crucial and slowed the process, she said.
But she had not seen a decrease in inquiries from renters. “I have been busier with owners who have decided to pull their houses off the sales market to rent them out.
“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 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 poorquality homes were taking longer to rent, he said.
Rotorua’s rental supply “would appear to be contracting” as property owners sold up due regulation changes, he said.
A flood of new rental housing was unlikely in the current climate, he said.
Gentle believed 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 familysized rental properties.
He said some clients were sacrificing meals or sharing food costs with family to ensure they could keep paying rent. “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.”
He put the downturn in rental demand to homes being unaffordable and tenants who could pay staying loyal to their landlord. “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 .”