By Katee Shanks and Sinelle Fernandez

Rotorua tenants, including "double-income families" are being locked out of the rental market as weekly prices soar 20 per cent in 12 months.

The latest Trade Me Rental Property Index for September show a typical three-bedroom home costs $350 a week, a 20 per cent rise from September 2016.

One Rotorua property expert said he was "very worried" about the increases and the impact it had on potential tenants.

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Richard Evans, co-director of Rotorua Rentals, said the ongoing issue of demand outweighing supply was aggravating the situation.

"The rental pool overall in New Zealand has shrunk quite dramatically in the last two years, and the demand has risen quite dramatically," he said.

High demand for rental properties had encouraged landlords to increase rents.

He said those who couldn't keep up with the market's demands would likely move out to places such as Tokoroa, where prices were cheaper, but that put tenants further away from the cities.

"I am worried, because in a place like Rotorua, a high proportion of our tenants are beneficiaries," said Evans.

He expressed particular concern for those in lower socio-economic areas, as rent prices increased but not income, disrupting the balance.

Yet, the natural order of the property market may redeem that balance, he said.

"It's a property cycle.

"Over the next three to five years' time, house prices may stall. Unsold houses may come into the rental market. And then in another three to four years after that, there may be another boom."

Gina Peiffer, Rotorua Love Soup co-ordinator, an organisation providing food and support for the homeless and struggling, said weekly rent was hard enough to pay and increases were making it near impossible.

"My own rent has increased $50 every six months since we took the place.

"I am aware landlords are legally able to do this but it's making a bad situation worse. My income hasn't increased at all.

"An average one- to two-bedroom property between $300 to 400 is unaffordable for most people. And I'm not just talking about beneficiaries. Many of the people we are trying to find homes for are double-income families."

Peiffer said if Work and Income were not subsidising renters with the temporary accommodation supplement there would be many more people living on the street.

"And some of these homes people are fighting for are absolute dogs bodies," she said.

She believes there should be some sort of regulation implemented for the rental market.

Simon Anderson, chief executive of Realty Services, which operates Bayleys and Eves, said Rotorua rent increases were a double-edged sword.

"What we've seen in Rotorua is a definite shortage of rental properties so supply and demand is a factor in increased prices.

"The shortage is due to the Rotorua business sector being so buoyant which makes the city a good place to invest.

"Property sales have been strong and vendors are enjoying an appreciation in values. But this contributes to both a shortage in available property as new people come to Rotorua and an increase in rents."

He said he was aware the lack of rental homes and increased rents were making it tough for many Rotorua people, especially those who fell into the lower socio-economic bracket.

Patrick Perston is one of those people.

Perston featured in the Rotorua Daily Post five months ago when he had found a rental property after sleeping in his car for six weeks.

Now, after living in a cold, mouldy home, he is back searching.

"The property I got was really hard to heat and full of mould.

"I couldn't have my 4-year-old daughter at the house because it was so cold and, although the landlords have insulated the property and installed a panel heater, the mould is still there."

He was worried the mould would make his daughter sick.

"I was paying $245 for the property and I know how hard it is going to be finding another house for the same amount. Especially when you're filling out the forms, or going to view a house, and you know how many others are doing the same thing for the same place.

"It's a fight that pits one family against another."