'Desperation' for homes driving rent prices up in small-town New Zealand

Aotearoa's national median rent is $520 per week - in city centres like Wellington and Auckland, tenants can expect to pay more for their housing. But what about the towns that are less travelled?

High rent prices are no longer just a city problem - lower socioeconomic areas are seeing housing costs outstrip incomes and it's forcing New Zealand's most vulnerable out of the market. 

Moerewa, a small town in Northland, is seeing its prices skyrocket, and the chair of the local marae says it's unsustainable. 

Dolly Baker told Newshub when rentals started popping up in Moerewa she was excited.

"I thought great, great for the community, great for people looking to buy

But what we've found is that it's not people who are local who are buying them - the people who are buying them are buying them for rental properties, for investments."

She has no problem with investments - but when the cost for that investment is passed on to the vulnerable it starts to impact the community she holds dear to her heart.

"We have lots of whānau moving home who haven't established themselves in work, who are struggling and who can't afford these prices."

Data from Trade Me shows median rent in the far north, where Moerewa  sits, has skyrocketed in the last year, up 16 percent to $430, and demand for rentals has more than doubled. 

For comparison, the median income in the town is just $19,400. 

"It's just, in my opinion, too high," says Baker.

She says the prices are so unattainable some houses have multiple families in them just to try and scrape by.

Baker's tale of her community isn't a new one - many of New Zealand's vulnerable are living in overcrowded, damp and mouldy homes. 

A recent Stats NZ report showed one-in-five Māori and almost two-in-five Pacific peoples were in crowded homes. While one-in-nine people in Aotearoa live in crowded homes, Māori and Pasifika people have consistently experienced higher rates of overcrowding since the records began.

The fact that people are willing to live in overcrowded homes is a perfect example of the crisis, says Baker. 

"They don't care about the price, about the crowding - desperation drives people to do whatever they need to do."

It's a similar story across the country - recently Porirua, a suburb outside of Wellington, hit headlines as the most expensive place to rent in New Zealand with an eye-watering average rent of $625 per week.

It's a lower socioeconomic area -  data from the 2013 census shows 25.4 percent of those employed are on low incomes and 8.3 percent have no income at all. More than 30 percent of Porirua are renters, and a 2018 report found 20 percent of children lived in overcrowded houses, and a quarter were in homes that were damp and mouldy. 

Porirua Mayor Anita Baker says the costs are outside the reach of "too many" local families.

"There are fewer and fewer properties under six figures, which means only landlords or people lucky enough to have families who fund them can even consider owning," she told Newshub.

"As for renting, the costs are such that it makes saving for a deposit impossible for most people. This is already a crisis that demands an urgent policy response."

The Real Estate Institute of New Zealand (REINZ) says the Government is to blame.

Chief executive Bindi Norwell told Newshub a shortage of stock means prices have climbed.

"This shortage has been slightly exacerbated by successive changes to tenancy laws over the last few years which has meant that some investors have chosen to exit the market, therefore, reducing the overall number of properties available for rent."

The COVID-19 pandemic has also intensified the market in smaller  regions, such as Moerewa and Porirua.

"We've seen a definite shift in where people are choosing to live  in part due to increasing flexibility from employers in allowing people to work from home, but also, because people have chosen to move to more affordable areas if their employment prospects have changed this year. This has put increasing pressure on rental property prices in smaller parts of the country where there was already a shortage of rental housing," says Norwell.

So what to do?

Anita Baker says there's no end in sight, unless more land is made available for houses. She says the Government should provide rent to own homes so low income families have a chance to own their houses.

The Government says it's committed to ensuring all New Zealanders have a safe place to live.

"For people on low and fixed incomes rents have grown faster than incomes," Associate Minister of Public Housing Poto Williams said.

"If a tenant thinks their rent is too expensive and can show it exceeds the market rent by a substantial amount, they can apply to the Tenancy Tribunal to reduce the rent to an amount that is in line with market rent."

 She says the Government will prioritise improvements across the housing system by enabling an increase in supply, championing better conditions for renters and adding support for people who do not have homes, 

"Our ambition remains the same - affordable, safe, warm, dry homes for all New Zealanders."

As for Moerewa, Dolly Baker has a dream for her community.

"In an ideal world, the community would come together to create a housing trust where the collective community contributes funds towards everyone so properties and land become available and we can create decent rental properties for our people to live in," she says.

"I know there's intricacies that go with that dream but I think the first step is talking about it."