Difficulties securing finance, council red tape and the imminent depreciation changes are acting as disincentives to rental property development at the same time as shortages are driving up rents.
"There's little incentive to be an active landlord anymore," said First National Bobergs Wayne Boberg.
"There is no finance available for development or developers in the current economic climate after the demise of the finance company sector. On top of that, red tape with council consents and the cost of planning approval are anything but an incentive to build.
"The returns landlords can achieve with development just don't justify their investment."
Boberg said that with gross yields of between 4.5%/5% the norm, it was becoming more attractive for potential landlords to simply leave their money in the bank.
Unsurprisingly, all of the Auckland First National offices reported rent rises across the board, a situation Milne said was unlikely to change until more rental stock becomes available.