University students in Wellington face increased rents and, in some cases, hikes of up to $500 more a week for a house, the Victoria University Students' Association says.

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The capital's rental squeeze means many students are likely to face stiff competition for rental properties during the traditional summer turnover of rental properties as leases expire.

From next year students who qualify for an allowance will get an extra $50 to cover living costs, and those who do not qualify will be able to borrow an extra $50 from the government.

The Victoria University Students' Association says some landlords have increased the rent they're charging - often by around $50.

The Wellington Property Investors' Association president Richard Bacon said he did not want to comment on anecdotal "knee-jerk" comments about some landlords apparently mopping up the boost to living costs with rent increases.

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Students' association president Rory Lenihan-Ikin said the Wellington rental market was getting more and more pressured. Students were struggling, he said.

"Over the last few years students have been struggling, and other renters have been struggling hugely to find places.

"When students come back to the city after Christmas it is such a high pressure time with big lines outside buildings and people doing really anything, bidding against each other to try and get into a place.

"We've seen it again this year but finally the government has come through with a bit of extra money to cover the rising costs that students were facing.

"There are quite a few properties around Wellington where the rent has gone up $50 a room in some cases."

He said it was a bit of a case of the landlords who "stole Christmas".

"We know it's not every landlord, of course but it is relatively widespread. There's been quite a large number of students getting in touch with us saying that their room's cost is going up in the vicinity of $40 to $50. I was talking to a student yesterday, the flat itself is going up by $500 a week and that's a nine bedroom flat.

"There's no way that that increase can be justified based on maintenance."

Mr Bacon said the market was difficult but the comments about rent and living costs were unhelpful "anecdotal knee-jerk reactions."

"The position of the association is that we want to work closer with tenants and towards a better rental market.

"Wellington's rental market is always more seasonal than anywhere else in the country. If you look back, this time of year between now and the end of February there's always a shortage of stock. If you look at July you'll see rents dropping.

"Yes, it's quite difficult and it's probably going to be a tighter market but not by a factor of 10. It will just be a tight year."

TradeMe figures suggest the number of properties available halved nationally since the same time last year. Across the country, the national average rent increased for the first time this month, up to a record $460 a week.

Head of Trade Me property Nigel Jeffries said Wellington tenants were feeling the pinch. In the capital, the median rent is up 8.7 percent in a year to $470 a week. A two-bedroom property in Mt Cook received 33 enquiries in the first three hours of being listed, he said.

"While we did see rent rises around this time last year, the market is much tighter this year and the coming months are not looking good for flat-hunting Kiwis."

Nicki Cruickshank from Tommy's Real Estate in Wellington said that since the election she had 15 landlords who wanted to sell.

She said investors do not like planned changes by the new government to remove tax breaks and extend the bright line test, which means those who buy and sell a property within five years pay tax on the profits.

Houses were being sold to more first home buyers, she said.