Property investors have warned that rents could go up by $34 a week if the government scraps landlords' depreciation claims on housing, but the government says they are wrong.

TVNZ reported the NZ Property Investors Association said landlords would lose on average $1750 a year if they lost the tax rebate and this amounted to $34 a week, which would be passed on to tenants.

Labour MP Trevor Mallard estimated the increase could be as much as $45 across 400,000 households.

Demand for residential properties will exceed supply by 2013 with a 17,500 dwelling shortfall according to current predictions.

House and section prices have lowered and are stabilising but fixed mortgage interest rates have just started to rise and deposit requirements remain high.

However, rents are set to rise. Tenant demand for good-quality residential is predicted to skyrocket as the housing shortage hits.

NZ Property Investors Federation president Martin Evans says now is definitely the time to buy.

Horror stories of promising property developments falling over have been hitting news headlines, along with gloomy figures that show construction of new homes and sales of existing homes have dropped. Meanwhile, the population is at 4.3 million and rising.

While National’s promised changes to the Resource Management Act (RMA) should improve consent processes and costs, delays have been driving developers up the wall and holding up subdivisions in recent years.