Tokoroa has some of the cheapest homes in NZ, but there's not many of them available now.

Families are living in garages and caravans as out-of-towners buy up cheap Tokoroa properties.

Salvation Army lieutenant Steve Molan is turning away two to three families looking for rentals a week as the district's housing shortage intensifies.

"A couple of years ago you would be looking for a flat and there would be a whole list of options but now there might be two flats or sometimes no flats on [real estate agents] books for weeks," he said.

SUPPLIED This house was listed for sale at just $122,000.

"People are doing all sorts of things to try and get through. There are people with two or three kids having to live in caravans, in garages, or they are doubling up with families which is causing overcrowding.

READ MORE: Waipa's housing crisis is New Zealand's housing crisis

"It is affecting everyone whether it is parents with kids, single people, or couples. There are just no houses in Tokoroa. Tokoroa is in a crisis," he said.

FRANCES FERGUSON/STUFF For sale signs are few and far between.

Molan said the main causes were out-of-towners buying up cheap properties and landlords moving in or wanting to renovate properties to sell. The average residential property price in the South Waikato now sits at $209,480 which is a rise of 24.4 per cent in the last 12 months.

"People have moved down from Auckland, Rotorua, Hamilton and Taupō and are buying up houses because it is too expensive [elsewhere] and some landlords are also doing houses up because they want to sell them so they have asked tenants to leave.

"[It] has caused all the rents in the last couple of years to increase. You are now paying $250 for a three bedroom house whereas it would have been $170.

IAIN MACGREGOR/STUFF Families are struggling to find rentals in the South Waikato town of Tokoroa (file photo).

"People are turning up to look at flats and there are 15 other people lined up in the same desperate situation."

He said the Salvation Army was struggling to help.

"We have got three emergency houses and people can stay for up to three months but I can't even place the people that we have got into their own home and they are good people," he said.

ROBERT STEVEN/STUFF Increasing the area's housing stock is going to take time, Taupo MP Louise Upston said.

"All the social agencies have got the same problem. They have got people presenting themselves all the times, desperate, crying, and emotional.

"We are all desperately trying to find somewhere for them to live but there is nowhere. The only option we have got in Tokoroa is for them to go and find a family member, move out of town and find a family member, or go somewhere they can get into the motor camp."

Taupo MP Louise Upston said increasing the area's housing stock was going to take time but the Government was working to speed things up.

LUKE KIRKEBY/STUFF Aroha-Divine Moetu and Shyne-Mizpah Leilua get set for the Tokoroa Salvation Army's first ever 14 Hours Homeless Appeal.

"While it is really positive that more people are moving to areas such as South Waikato, the increased population brings with it challenges as well as rewards," she said.

"That is why I am continuing to work closely with the South Waikato District Council and other agencies to ensure we have planning in place for the infrastructure, transport, schools and housing needed to accommodate the increase in residents.

"One example of this is the Putaruru Growth Plan. I have been working with the council to facilitate its ability to streamline the process to make land available for new houses sooner through the Resource Management Act," she said.

Upston said she plans to meet with South Waikato mayor Jenny Shattock, the council, and social housing providers to discuss housing solutions in the short to medium term.

"I would urge people to visit Work and Income to see if help is available to secure accommodation in the area if they are having difficulties," she said.

Molan said the only short term fix he could see was to raise awareness.

"We are taking part in the Salvation Army's 14 Hours Homeless Appeal by doing a sleep-out outside the church on Friday, October 13 from 5pm," he said.

"It's being organised by Debbie Newton and there will be people sleeping in cardboard boxes and in their cars just to raise awareness about housing issues in Tokoroa."

He said participants are calling for donations which will go towards helping those in emergency houses get settled into their own homes.

Donations can be made into 020464 0146032 00, suffix 14HH.