Australia's average rental vacancy rates fell to an all time low of 1.9% over the past two and a half years, according to a report by Mortgage Choice/REIA Real Estate Market Facts.
Vacancy rates lower than 3.0% are considered indicative of an undersupply of rental accommodation.
REIA president Noel Dyett blamed strong population growth across the country as one of the key drivers of this chronic tightness in the market. Construction of new dwellings also continued to lag well behind demand as investors held back amid the threat of another rate rise.
"As a result of very tight vacancy rates, over the past year rents have increased significantly right across Australia," said Dyett.
"Increasing house prices and declining home loan affordability are keeping more people in the rental market, with the short-term outlook difficult for lower income earners in particular."
The most expensive rental location is Darwin, with a 34.4% annual increase in median rent for a three-bedroom house to $440 per week, and a 51.1% annual increase for two-bedroom dwellings, bringing the median rent up to $340 per week.
Adelaide has the cheapest rental units, at $255 per week for a three-bedroom house and $205 per week for a two-bedroom dwelling, although these average rental rates also increased by 8.5% and 7.9% respectively.
The outlook for renters is positive, according to Dyett, with a "slowdown in rent increases" on the horizon.
"Over the medium term, there should be an improvement in vacancy rates, and a slowdown in rent increases, as improved yields make it more attractive for investors to place their funds in the property market," Dyett said.
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