Dunedin's rental market is in crisis as prospective tenants struggle to secure one of a shrinking pool of increasingly expensive properties.

Tenants, support services, industry insiders and a politician spoken to by the Otago Daily Times yesterday said a severe shortage of rental housing in the city, combined with rising rents, was leaving a growing number of residents locked out of suitable accommodation.

Single mother Grace Huia has been searching for a rental property in Dunedin for about four months. After upwards of 30 viewings, the 21-year-old has yet to secure a home.

Huia and her 10-month-old son Eli are living in a central city boarding house with two other people. Caring for her infant son in her room in the boarding house was far from ideal, she said.

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"He goes a bit stir crazy."

She was also on a waiting list for a Housing New Zealand home. Despite being told she was a priority she had yet to secure a state house.

Real Estate Institute of New Zealand regional commentator and Nidd Realty director Liz Nidd said her company's stock of rental properties had never been lower.

"It's the shortest list we've ever seen."

Nidd said the main issue was the reduced supply of rentals.

"We just can't get enough new stuff in."

The "threat of the Healthy Homes Bill," combined with the requirement for all rental properties to be insulated by July next year, had forced some Dunedin landlords to sell, she said.

These properties had been snapped up by first-home buyers, further reducing the stock of rentals.

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The Healthy Homes legislation passed late last year will introduce new standards for rentals, including stricter heating and ventilation requirements, but the exact details of the new rules were still being finalised.

As the supply of properties in the city falls, rents are rising across the city. Trade Me figures show rents jumped 8.6 per cent in Otago in the year to March. Otago Daily Times