Renters in Rotorua could face tough times ahead as landlords re-valuate market rates before the Government lifts its price freeze in September.
But one social agency says its clients were holed up in motels and rents were ''unrealistic for any low-income families'' which was causing ''crisis and stress''.
The news comes after reports from rental agencies who are experiencing supply and demand constraints while the state housing waiting list has increased by 16 per cent in three months.
McDowell Real Estate relationship manager Rhiannon Greenwood said a lot of people ''are wanting to just apply for everything as they are just desperate for a place to live''.
That had driven a spike in applications for properties and some landlords ''are seeing this as an opportunity to be more selective about which tenants they accept for their properties''.
''They no longer need to take risks with tenants with bad previous rental history or less than great credit because there are so many to choose from.''
Rotorua Rentals director Pauline Evans agreed and said there was strong interest on any property $400 and under.
''The highest demand is for good housing, three bedrooms, close to schools, to accommodate families.''
It was taking more effort to find the most suitable tenant for properties, she said.
''Previously a tenant who may have had a previous issue may have been given a second chance, this is not the case now. Landlords are much pickier about tenant selection, with good reason.''
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The agency had also made plans moving forward to adjust its structure and portfolio in line with market trends and conditions.
''I have already had plans for increases for those tenants who had their increases cancelled due to Covid. We may well see a levelling off in rental prices, I have not seen any decreases at this time.''
Realty Group managing director Simon Anderson said it was not uncommon to get 30 applicants for a home.
Due to costs, including rates, some landlords were starting to advise tenants of rent increases.
Property investors were also entering the market who were ''putting properties into the pool'' but ''there has been a bit of activity from first home buyers which was squeezing the numbers".
''So it is a bit of a mixed pool some are hard to find tenants for but those good properties are going fast.''
Anderson said another trend the company had noticed was families coming back from Australia.
Meanwhile, Salvation Army lieutenant Kylie Overbye said the rent increases were having a huge impact on people's ability to live sustainably.
''While accommodation supplements are available for some, it's still not addressing the challenges families are facing. People are struggling to provide clothing for their families, and to have a full week's groceries in order to keep up with rent.''
Families living in motels were also under significant stress, she said.
''They aren't staying in motels by choice. There is just no other option for them as there are no rentals they can secure ... and their health and wellbeing is diminishing.
"After a short stay in a motel, no family ever says to us they are content in their motel.
''They are desperate to get out. They don't care if it is a state house or private rental. They just want a home.''
Figures from Ministry of Housing and Urban Development June quarterly report show the number of applicants waiting for state housing in the Rotorua District had jumped to 443 compared to 406 the quarter before.
It also reveals the number of people receiving accommodation supplements had rocketed to 28,230 from 26,144 over the same timeframes.
The accommodation supplement was a weekly payment to help people who were not in public housing with their rent, board or the cost of owning a home.
A person did not have to be on a benefit to qualify.
Trade Me Property spokesman Aaron Clancy said the median rent in Rotorua was $460 in June compared to $400 in June 2019.
The most popular rental listing in Rotorua in June was a three-bedroom, two-bathroom property on Lytton Street in Glenholme. The $520 per week rental received 43 inquiries in the first two days onsite.