The South Island mining town of Westport is the hardest place to score a rental property in New Zealand. A 30 per cent rental price rise in the last six months of 2019 has forced families out of town or to stay at motor camps this summer.
Figures for 2019 supplied to OneRoof by Real Estate Institute of New Zealand show that it’s not Auckland and Queenstown where renters are struggling, but suburbs in Rotorua, Invercargill and Hokitika where renters are facing rapidly rising rents and a shortage of properties.
Property Brokers Westport area manager Charlie Elley says the town went through the crisis of having too many rentals and now it doesn’t not have enough, driving the average weekly rent for a three-bedroom home to $300. If you can find one.
During the mining crisis in 2011 a lot of people left town because they could not sell their houses and there were a lot of cheap rentals.
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Then about two years ago, the number of jobs in mining were slashed from 1800 to 400, and the rental market freed up.
However, Elley says that the subsequent property price drop then meant that people from other parts of the country invested into homes in the West Coast to live in themselves, thus shrinking the number of available rentals.
“People from Auckland and mainly retirees from Nelson, realised that you can buy in Westport.
“The weather is pretty damn good, and you can capitalise on your $600,000 house and get the same here for $300,000,” Elley says.
Since then, it’s lucky for one new rental to come on the market in the year and number of available rentals "averages at none" right now, he says.
“We’ve had enough buyers to swallow up all those available rental properties.”
In a town with a population of 4500 people there are about 400 rental homes, all occupied.
The shortage of houses has forced rental prices to climb up and locals to move out of town as their search is continuously unsuccessful.
“We’ve had a steady flow of potentially homeless people requesting evidence on lack of publicly available rentals to take a letter to WINZ,” Elley says.
The town has no state houses available and a lot of families are permanently living in motor camps and motels, he says.
“We don't see many people on the streets because it’s just not in our culture. But if we did, somebody will probably pick them up and take them home. We are that kind of town,” Elley says.
However, unlike Queenstown, there is not a lot of “bulk flatting” (where eight or more people move into a three-bedroom home), Elley says. Not yet anyway.
The only way to ease the rental shortage is to build more houses but developers and builders are struggling to find unoccupied land, he says.
Another South Island west coast town Hokitika has had a rental price boost of 20.7 per cent with a three-bedroom place costing $350.
Property Brokers agent in Hokitika, Melina Theurillat, who manages 80 rental properties in the town, say there has been nothing available for the past couple of months.
A large dairy company Western Milk is based in Hokitika with hundreds of their workers and contractors looking for rentals. She points the finger at the short term holiday rentals.
“There are quite a lot of properties on Airbnb and if you put them on the market it would change things significantly. It would be a home to someone who may currently be struggling.”
Theurillat did not have any vacant properties in November, December and January and only one rental came available in February. She currently has about 15 people on the waiting list after they missed out on that property.
“It got a lot of interest and it’s only a one-bedroom and is 25 minutes away from Hokitika. So, it’s not the most sought-after property.”
The second biggest jump in the rental prices was in the Rotorua suburb of Glenholme, which had a 25.6 per cent increase, pushing the prices up to $490 for a three-bedroom home.
Donna Russell , director of Rotorua Property management company Russell Hardie, says that Glenholme is very popular amongst renters because of its handy location being close to schools, shops, town centre and Unitech.
Due to a high demand and strongly growing prices, tenants tend to stay longer at their rentals and take better care of the property, she says.
“About ten years ago tenants would stay for six to nine months and now, they extend the stay for as long as they can.”
The third toughest place to score a rental is in Invercargill, where the central neighbourhood Queens Park went up 21.2 per cent to $400 per week for a three-bedroom home in six months ending December 2019.
