Wellington is bearing the brunt of fierce demand for rentals, and there is no relief on the horizon.
Head of Trade Me Property Nigel Jeffries said the demand in Wellington was "massive", with the number of available rentals dropping 70 per cent on December 2016.
January "is likely to be even more extreme", he said.
In one case, a two-bedroom rental in Wellington was listed for 25 hours before it was taken down due to a flood of 55 applications.
The capital also saw the highest rise in median weekly rent over the last two months, up $30, from $450 to $480 in December.
Jeffries said rental availability would only get tighter, and prices higher in 2018.
"Overall the shortage of rental properties isn't going to get easier anytime soon."
"Demand will continue to exceed supply this year and as a result we are predicting that the national median weekly rent will rise between 3 and 5 per cent."
Wellington tradie Andrew Galt has been hunting for a new flat for the past month and has two weeks to find one.
Galt went to one flat viewing with 12 to 14 other people there vying for a room and it was only one of four viewings the current leaseholders had set up.
"The organised people are really competitive ... it's like semi-hostile ... I show up in my tradie gear and they're all like 'sweet I don't have to worry about him' but at least it looks like I have a regular pay cheque."
Galt said last time he was looking for a flat it was the middle of the year and way less competitive, but this time around students are "everywhere".
Jeffries said that fiercer demand for rentals was being seen all over the country, not just Wellington.
"Nationwide the number of available rentals has halved since December 2016, falling 49 per cent with median weekly rent rising 2.2 per cent to $460 per week."
"While it's common for us to see the median rent increase in December, it doesn't usually increase this much."
"The market is much tighter than usual and it is highly likely that tenants will be asked for record rents in January and February all over the country."
ASB economist Kim Mundy said Wellington had been experiencing reasonably high levels of population growth recently, which increased the demand for homes to purchase and to rent.
ASB data found the median days to sell a house, a measure of how "tight" the market is, was lowest in Wellington, with a median days to sell sitting at 32 in the capital, followed by Auckland at 35 days.
"There is a correlation between the tightness in the Wellington market that we see in general and then that tightness in its rental market," she said.
Mundy also said Wellington's reputation as a university city and its "relatively constrained number of houses" also played a role in how tight the rental market had become in the summer months.
Sales activity increased at the end of the year, according to REINZ latest release, but Mundy said this did not necessarily indicate a longer term trend going forward.
Wellington has been experiencing reasonably high levels of population growth recently so that does increase the demand for homes
Jeffries said the decline in available rentals in Auckland was slightly less than the national decline, with 35 per cent fewer listings in December compared to December 2016.
Rental properties were listed and filled rapidly in the city.
"Typically we see the median weekly rent in Auckland take a slight dip between November and December however, this year rent remained steady and unchanged on November at $530 per week," he said.
He said he would not be surprised to see the median weekly rent break $550 by the end of summer in the super city.
The Christchurch rental market was bucking the national trend after it stabilised in December. The median rent was up a minuscule 0.3 per cent, just one dollar on December 2016 from $399 to $400 per week.
"While the number of available rentals in the Garden City was down 60 per cent on the year prior, available stock levels in December were similar to what we have seen in previous years and pre-earthquakes, which explains why we haven't seen the rent rises we would expect," he added.
Jeffries said every region's median weekly rent was up year-on-year in December except Taranaki and the West Coast, which remained unchanged.
He called Northland and Marlborough "star performers" over the December period, with both regions median rent climbing more than 12 per cent on December 2016 to $395 and $423 respectively.
"Landlords in Nelson also have plenty of reasons to smile this month after the median weekly rent rose 9 per cent to end the year on a record at $420," he added.
Of those on Trade Me, one to two bedroom houses had record high rental increases up nearly 9 per cent on December 2016 to $380.
Jeffries said the rise in smaller houses was driven by the Wellington market, which grew 11.4 per cent to a median weekly rent of $390.
He said the Healthy Homes Guarantee Act, the second major piece of legislation to pass under the new Government, could get property investors to sell up rather than "deal with the additional costs required to get their property up to standard".
"While this new policy will mean drier and healthier homes for some, this will likely contribute to the current rental shortage," he added.
ASB's Kim Mundy agreed the Healthy Homes Guarantee Act on top of changes to the bright line test and the changes to negative gearing overall would see less investors looking to rent out properties, but the equation was "muddied" by lowered LVR restrictions and the push to construct more affordable homes.
MEDIAN WEEKLY RENTS IN DECEMBER
- Wellington $480
- Auckland $530
- Christchurch $400
- Northland $395
- Marlborough $423
- Nelson $420