Many private landlords are bailing out of the rental market because they are worried about the new government's housing policies, say property experts.
The experts say landlords are being tempted to take their capital gain and run, before harsh new rules undermine the value of their investments.
The concerns have arisen as the government moves to implement dramatic reforms of the housing market.
The looming changes include:
* A capital gains tax on second homes, depending on the outcome of a special tax inquiry.
* The imposition of 'ring-fencing rules', which would reduce tax deductibility for rental houses, by ensuring losses cannot be set off against other income.
* An extension of the 'bright line test', under which anyone selling a rental home within five years would be deemed a trader and would therefore be taxed.
Property Investors Federation executive officer Andrew King said these planned changes were scaring off investors from the property market.
He said the personal hostility directed against landlords was another issue.
"There's been a lot of animosity against rental property owners. There is a lot of misinformation about their tax situation, a lot of people think it is easy money when it is not.
"There are also changes to the how the property can be managed, and there are a lot of increased costs.
"A lot of people are thinking it is just not worth it and are looking at getting out."
Mr King said changes such as the ring-fencing rule and the bright line test did not apply to other businesses, and so were unfair.
Mike Coffey, the Wellington regional director for the Real Estate Institute, thought the new government's coming changes would put up barriers against new investors in the property market.
He said this would tilt the playing field in favour of large, well-established companies with deep pockets, and would do nothing to help the supply of rental properties.
But he pointed out that one government plan would not have an impact: restricting sales of homes to foreigners who were claimed to distort the market.
"I believe it's a myth, certainly in the Wellington region," he said.
"I know from our experience in the Hutt Valley there is such a miniscule amount of overseas buyers you could not even count them - it is tiny."
The government has dismissed criticism of its policies as anecdotal.
It said its housing policies were aimed at overcoming accommodation shortages.