Where are the rentals? Southland's worrying rental property dip

Friday, 22 February 2019

Rental houses in Invercargill are in hot demand.

The anecdotical murmurings point to Southland having a major rental problem, and the numbers suggest those conversations are not all hot air.

It is economics 101 according to those within the industry.

There are more people wanting homes to rent than there are homes available to rent in Southland.

People are 'shoulder-to-shoulder' at rental viewings and finding a home to rent was now akin to applying for a job in many circumstances.

* Empty Southland lots not necessarily where people want to live

* Southland offers endless opportunities**

After a decade of almost stagnant prices in Southland, those in the industry said in most cases landlords were able to charge more than ever.

Head of Rentals for Trade Me, Aaron Clancy, said in January there was a 23 per cent dip in the total number of Southland rentals being advertised compared to the same time a year before.

He said prices had also risen, with the median rent for three or four bedroom Southland houses now at $318, up 9.5 percent year-on-year.

It is up on the national median weekly rent increase of 5.3 percent.

While Southland rental prices have increased, they still remain much cheaper than the national average of $495 per week.

Those on the ground renting out the properties see first hand the scrap that is brewing as renters try to find a place to live in Southland.

Pride Property chief executive Avinash Varghese said tenants had been voicing their anger at the price hikes, but the reality is the Southland rentals are being snapped as quickly as they are advertised.

'My advice would be if you can buy a house then go for it,' he said, warning of the rental squeeze.

His theory on Southland's decrease in rental availability was it had been prompted by first home buyers tapping into their Kiwisaver.

'Those people who started out in Kiwisaver are now buying. So couples who might have been renting with three or four other people are now buying their own homes and living in them by themselves. There are less rentals out there now.'

'If you go along to a viewing [today], for say a $250,000 house in south city, there will probably be 20 interested buyers there. In the past there might have been two.'

Included in the increase in rental payments was new insulation requirements handed down by the Government, as well as general maintenance, Varghese said.

Varghese believed renters generally expected more now than previously, right down to having a modern kitchen. Those costs were being passed on to renters.

The rental squeeze was not restricted to Southland's most populated area, Invercargill.

Sharon Wenlock, a senior property manager with Harcourts in Gore, said the rental market was in 'dire straits' in the Eastern Southland area.

Wenlock said they had one property in Mataura available and one other in Gore.

Other agencies were in a similar situation, she said.

'You go to a viewing now and there will be five or six people there. For a small town like Gore that is a lot,' she said.

The scrap over a limited number of properties had meant landlords could be more picky than previously, Wenlock added.

Aspects like not having pets were now getting factored in more than they might have in the past.

Te Anau has its own housing problems, although PGG Wrightson property manager MJ Moffat said the lakeside town's situation was unique.

Te Anau's peak season is between August and March when seasonal workers were in town catering for the tourism industry.

During that time the rental market was put under pressure, however in the winter months there was a lot more available, Moffat said.

Naturally landlords wanted people locked in for 12 months rather than a few months, which made Te Anau's situation tricky, she said.

The growth of short-term rental options like Airbnb had also played a role in limiting the stock of long-term rentals available in Southland.

Moffat said Te Anau had seen a big growth in Airbnb houses from year to year.

The rental dilemma was part of a wider Southland housing problem which various provincial leaders have declared a crisis.

A Southland Action Housing Group was setup last year in an attempt to look at ways to address the problem.

In November last year, the group, led by SBS Bank chief executive Shaun Drylie, produced their numbers to highlight the extent of the problem.

It stated 140 homes were needed throughout Southland right now in the emergency, transitional and state housing area.

Another 2600-plus houses was needed in the next 12 months to fill the general housing gap, with over 480 houses required every year after that for five years just to deal with population growth.