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Renters are scrambling for properties in a housing shortage that has deepened in central Auckland and is now rippling out to the suburbs.

Some areas have seen rents rise by up to 28 per cent and more increases are on their way as the first tax bills disallowing depreciation claims hit property owners from April.

Letting agent Lesley Wills, of Ray White, held a viewing at a Mt Eden house at the weekend and got 10 groups hungry to get a lease.

"People will say, I've been looking for three weeks. I really like this place, I really like it."

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Several applications would be lodged for every listed property in a popular area such as Mt Eden, most of them from suitable tenants.

"It's sad when there's two or three applications that totally fit the criteria, and you have to decide.

"Some of them are so frustrated. They're stressed. They're so over it."

Many were from Christchurch, but they were just among a large crowd struggling to find a place to live.

"Some are really desperate."

The shortage was acute in the inner-city suburbs, she said.

"I don't think there's enough rental properties near the city ... Most people will have to take their rose-tinted glasses off and say they have to live further out in the suburbs.

"Give me a million houses in Ponsonby. People love Ponsonby."

Rental property owner Sue Beesley put up a listing for a central apartment overnight on Monday. By the time she checked online yesterday, more than 600 people had taken an interest.

"It's a very busy time... A lot of people are trying to shift," she said.

Mangere Budgeting Services chief executive Darryl Evans said many people were struggling to find a place to live. "We've talked about how many of our families [won't] achieve home ownership - but the reality is they're struggling to even get a rental."

Harcourts chief executive Hayden Duncan said there were ongoing reasons for the shortage that would continue to put the heat on rents.

"Demand for rental properties is outstripping supply by such a large amount there is an upward pressure on prices, and that's clearly evident in the inner city," he said.

"There's a lack of incentives for developments in the inner city."

The pressure would be spreading to the outer suburbs, Mr Duncan said.

Ray White City Apartment Rentals owner Chas Wilson said it had become impossible to build cheap housing in the inner city.

"Just expect rents to go up."

Property Investors Federation president Andrew King said the tax returns filed by property owners starting in April would be the first time they would see the effects of the removal of depreciation for rentals.

"Most of them won't realise how much it's costing them until they see the actual returns. It will give them the impetus to raise the rents."

Meanwhile, figures from the Department of Building and Housing show market rents in Hamilton staying reasonably static. The average rent paid in the city to last November was $296 - a 2.4 per cent increase on the same time in 2010.

Vicky McGuire, who runs a property management business, said the rental market was reasonably healthy and had not been affected by the traditional rush of university students or by new migrants or earthquake-stricken Christchurch residents needing new homes to live in.

She said there was a shortage in the northern suburb of Rototuna of upmarket properties. "A lot of people just don't want to rent anything that's not clean and tidy. Ten years ago people rented anything.

"Even university students, they want to go in for the nice three-bedroom townhouses and pay a little bit more. People didn't care before if homes had heating; now they're demanding homes have heat pumps."

FINDING COMFORTS OF HOME PROVES TO BE 'PRETTY PAINFUL'

Matt Bilkey, 28, and Kate Allinson, 22, moved out of their flats in early December to look for a house in which they could live together.

But they are still looking, as they jostle with crowds of would-be tenants in a competitive market.

"It's pretty painful at the moment," said Mr Bilkey. "It's turned out to be a little bit harder than I first imagined."

A recent viewing at a Kingsland property had been flooded with about 40 people, most of whom filled out applications on the spot.

"The hard thing then is to differentiate yourself from someone else. We turned up and thought, 'do you even bother to go inside?"'

The couple tried putting together a nicely formatted electronic letter and application for the property owner, to do something a little different. But they never heard back.

They were willing to pay $700 for a three-bedroom house in a suburb close to the central city, but they would see only about two or three suitable new listings a week for each suburb they were interested in.

"We're still on the look out," Mr Bilkey said. "We look good on paper, and I'm a landlord myself so we thought it would be a bit different than a student looking for a flat."

Paul Rumsey is also looking for a house to live in with his partner, and he is going to his first viewing tomorrow.

He said he liked what he saw online and he was hopeful about his chances of finding a nice home by April.