High rents in the Sydney area are prompting many families to move out of the city in search of more affordable homes, according to PRDNationwide research.

The company said that the popularity of three bedroom houses in Wyong and Port Stephens has risen steeply in the last two years, with strong demand for family homes driving up rental yields.

Port Stephens, a two-and-half hour drive north of Sydney, has seen a 14% increase in new bonds lodged with Housing NSW as renters flock to the seaside town to take advantage of cheaper accommodation.

PRDnationwide research analyst Oded Reuveni-Etzioni said the price difference between Sydney and more affordable areas to the city’s north and south is significant and is causing families to start looking elsewhere.

"The research shows that the top five regions for rental price growth in family homes are all outside metropolitan Sydney," Reuveni-Etzioni said.

He added that the family drift has also come partly because the cityscape has changed. “Large scale one and two-bedroom unit developments in Sydney [cater] for young professionals and the student population, as shown by an increase in residential tenancies in areas like Canada Bay, Marrickville and Ku-Ring-Gai."

PRDnationwide Leichhardt principal Danny Harb agreed.

"In recent times, we have noticed that families have struggled to enter the inner-city market due to price hikes and greater competition at auctions," Harb said.

"We are [seeing] younger families having to commute from outer suburbs where real estate is somewhat more affordable. Most of the tenants occupying investments these days have to share in order to afford the inner city life."