Rental prices ramped up in Southland due to housing shortage

Monday, 26 February 2018

A 'shocking' shortage of available rental properties in Invercargill has resulted in rent prices being ramped up and people seeking out emergency shelter.

Trade Me property figures reveal median rental prices in Southland have risen by eight per cent in the past year, from $250 a week to $270 but the province still lags behind many other regions when it comes to renting a home.

Invercargill rental managers spoken to on Monday confirmed prices had gone up and laid the blame on the shortage of properties.

'Definitely rents have increased,' Pride Property Management Invercargill manager Jackie Alexander said.

'It's because of a shortage of rental properties.'

'We have a portfolio of 400 rental properties and we have got two to rent … that shows you what the demand is.'

People were ringing her office every day looking for properties to rent, she said.

'It's so sad. We turn away so many people that we can't help and it's horrible. It's a sad situation and I can't see it getting any better.'

Each property which became available attracted about 50 applicants, she said. 

'It's very bad, it's shocking, there's not enough houses to go around so that's why they are seeing the [rent] increases.'  

The shortage of properties was down to several factors, including investors cashing in their rental properties to young people buying their first homes with KiwiSaver money.

The number of rentals available in Invercargill had decreased 'quite significantly' in the last 18 months.

More houses needed to be built in Invercargill, she said.

'If you brought me 10 new builds today I would have them rented by the end of the week and you would be looking at $350 a week.'

New stipulations on homeowners, including that they insulate their homes, was also putting off some rental investors.

'I agree no one should have to live in a damp cold house but some owners don't have the finances so it scares them off.'

Invercargill Salvation Army community ministries co-ordinator Brenda King said their emergency housing was full, as people were unable to find rentals in the city.

The Salvation Army was turning people away daily.

When the Salvation Army took people in, it aimed to find them housing and move them on.

'But we are having difficulty doing that, it's a big problem … rentals are scarce and they are too high for a lot of people.'

Trade Me Property boss Nigel Jeffries said the Southland rental market had been in a catch up phase recently.

The number of rental listings in Southland was down 15 per cent year-on-year which had led to a $20 jump in median weekly rent.

However, Southland rents were still comparatively cheap when compared to the rest of the country, 'which means we could continue to see rising rental prices over the next few months'.

Southland Regional Development Strategy [SoRDS] programme director Sarah Hannan said economic growth would support the region's ability to fund the appropriate level of infrastructure, housing and services.

'Increasing Southland's population is key to achieving this economic growth.'

Southland's population was ageing and shrinking in proportion to New Zealand's total population, she said..

Harcourts Invercargill manager Wayne Ellis also said a shortage of rental stock had pushed prices up.

'We haven't seen this shortage for quite some time … it makes it challenging to find suitable homes for those that want to rent.'

Southland's eight per cent rental price increase in the last year is nearly double the national median rent rise of 4.4 per cent.

The national median rent price is at an to an all time high of $470 per week.

The median rent price in Northland rose to $385 in the last year and to $380 in the Bay of Plenty.

One man's story

Andrey Andreev has some advice for people struggling to find a rental property in Invercargill - look outside the square and persevere.

Andreev, who moved to Invercargill from Auckland with the aim of studying at the SIT, took five weeks to find a house to rent when he was looking in 2016 - well before the shortage of available properties reached its current levels.

Even then, he enquired about 'dozens' of properties before being accepted.

Eventually he found a place in Invercargill through a rental agency but decided to move out later in the year to a warmer home for his family. 

It took another five weeks to find his current rental property in Richmond , and got it more by good luck than good management.

He saw a small advertisement in the newspaper and rang it, and two days later the home owners who had placed the ad accepted him and his young family as renters.

Going the normal route had proved fruitless, he said.

'I was thinking, it's not impossible, right? but I was talking to other people … and they said finding a place was so hard.'

His advice for would be renters: 'Look for places where you won't expect to find a listing, ask people you work with … because everyone is looking online and it's hard to compete.'

His perseverance had paid off, he said.

'Giving up wasn't an option.'