Some people are moving out of Rotorua because they can no longer afford to rent in the city, while others are struggling to secure a rental with such high demand.
Latest figures released by Trade Me showed the median rent in Rotorua jumped to $320 a week in October, compared with $290 in September and $280 a year ago.
Rotorua Rentals director Richard Evans said he was seeing more people moving to nearby towns because they couldn't afford to live in Rotorua.
"I've had three this week alone who can't afford the higher rents and are moving to Tokoroa or Kawerau because they can't afford the higher rents here."
Mr Evans said they tended to be people who were beneficiaries or working part time who just weren't able to pay the higher rents and weren't able to get any further accommodation supplement funding.
"Rents have gone up quite steadily. Every time we have had a vacancy we have tended to put the rent up."
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He said landlords were making up for lost ground.
"To be fair, two years ago they probably wouldn't have put the rent up at all."
The other big change in the market was the length of detail people went to when they inquired about properties.
"People now write us quite long emails ... I haven't seen that before. Really only in the past six or 10 months we have started seeing these long, rambling tales of woe."
Professionals McDowell Real Estate Rotorua principal Steve Lovegrove said renters were feeling the impact of the loan-to-value ratio rules, which were aimed at investors.
"The ones who are missing out are not the investors. The people who are truly missing out are the tenants because they can't find properties."
He said there weren't as many properties available for tenants to rent, and with house values going up landlords were looking at their returns and what rents they were achieving from the properties they owned.
"What is happening is that landlords are becoming picky. They might get 30 to 40 applications for one property.
"Tenants absolutely have to have clean references, they have to present well with a good record to have any chance."
Mr Lovegrove said it was difficult for property managers who were often seeing "good people missing out".
"The heart strings do get pulled."
He said while they were "digging around looking for more properties" there often weren't any more.
Ross Stanway, chief executive of Realty Services, which operates Bayleys and Eves, said the increase was not huge but appreciated that it might be seen as such by some tenants.
"As the demand remains steady, landlords will be moving with the market and putting their rent up as they get new tenants in.
"The fact the rental market is still a busy one is a positive for Rotorua because it shows there is still interest here and people are making the move."
Mr Stanway said the rising rent prices went hand in hand with the buy and sell property market.
"Across the board there is a whole new awareness and attractiveness about Rotorua but at the same time it is still being seen as a place where you can get good value for money."
-Additional reporting by Stephanie Arthur-Worsop
Trade Me median weekly rental figures:
* October 2016 - $320
* Septmber 2016 - $290
* September 2015 $28