The blossoming tourism industry is leading to a shortage in housing supply
It seems Rotorua is committed to becoming a billion-dollar tourism destination, as demand for investment properties in the city is “red hot” due to supply shortage and accessible price points.
Growth in the city’s private investments cannot be stopped, with Pukeroa Oruawhata Group developing a $30 million luxury spa and wellness centre on the waterfront that is expected to employ 80 staff once it’s finished in 2021, as well as other small pocket developments throughout the city.
However, the blossoming tourism industry in the city has led to a shortage in housing supply – prompting property experts to warn investors that they might need to search harder and longer to get yields above 6%.
“Before I could find one or two a week, now if I find one or two a month I’m doing very well. It just takes a lot more looking – investors need to be very careful how they purchase,” Debbie Van Den Broek, agent at iFindProperty, told Landlord.co.nz.
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Maree Passier, property manager at Rotorua Rentals, warned investors that high rents and fixed-term contracts are becoming more common in the city.
“When it comes to rental supply, we’re still using the word ‘crisis’ – because it definitely is.” Passier said. “They are fixing terms way more than they ever used to and we’re encouraging it for both parties.”
Van Den Broek added that investors should also be wary of rents that seem steeper than the current price range.
“We’re finding that the rents are really high and they’ve gone up considerably in the last three months,” Van Den Broek. “You could probably rent a house for whatever you ask, but you start compromising your quality of tenants, because it appears WINZ will pay anything to get people into homes – it’s cheaper than having them in a hotel,” Van Den Broek said. “There [are] always good deals to be had [but] you’ve just got to watch that rent isn’t artificially inflated and that tenant quality isn’t compromised.”
