Covid causes oversupply in rental market

Tourism operators in Queenstown are struggling.
PHOTO: ODT FILES
It is a tenants’ market in Queenstown Lakes and Central Otago as holiday and longer-term rentals fall victim to the long tail of Covid-19.

In Queenstown, the impact is particularly acute, with only the school holidays offering some cushioning.

Harcourts Property Management Queenstown business manager Paul Hibbett said the Airbnb-type market was experiencing demand over the school holidays but there was a "dearth either side".

"Basically, it is the decimation of the tourism and the hospitality industries."

That included the actions of foreign nationals who "abandoned properties and flew out on the first repatriation flight they could get".

Asked if that meant those tenants had left debt in their wake, Mr Hibbett said the four-week bond generally covered it and new tenants could be found before property owners faced losses.

There was also significant movement between properties as tenants upgraded from poorly insulated, single-glazed homes.

Many short-term rentals had reverted to long-term rentals and there was an "oversupply" in the rental market.

"If you check the listings on realestate.co.nz for Queenstown alone, there are probably 300 to 400% more listings than three months ago."

Wanaka Accommodation Centre manager Melanie Moore said about 20 rentals were available in and around the town, rents had dropped and there were "slightly more" available.

The area was not as badly affected as Queenstown, she said.

That sentiment was echoed in Cromwell and Alexandra as agents spoken to by the Otago Daily Times reported increases in availability and decreases in rents. However, it was more an easing of the market than a flood.

CoreLogic senior property economist Kelvin Davidson said his company, which is the parent company of QV, had crunched figures only for Otago but Queenstown had been flagged as "high risk".

Rental listings were "slightly above normal" for the whole of Otago, with a spike in June.

The June spike had been seen in previous years, something he put down to a seasonal influx he suspected Queenstown was responsible for.

"I can’t imagine Dunedin has seasonal influx, particularly not in June."

Predictions there would be a flood of Airbnbs into the market had amounted to little more than a trickle across the province.

"For now, the data shows it is actually holding up OK."

jared.morgan@odt.co.nz


 

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