The growth in the rental markets across regional areas continues to prevent Australia's overall rents from sinking further, according to CoreLogic.

The decline in rental values across Australia eased from 0.5% in the June quarter to 0.2% in the September quarter. This was due to the 1.2% gains in regional rents.

On the other hand, capital cities reported a combined decline of 0.7% in rents, similar to the fall recorded in the previous quarter.

Melbourne, Sydney, and Hobart were the weakest performers. The increase in supply across these regions over recent months continues to weigh on asking rents.

Furthermore, these regions have been the most impacted in terms of demand, as they continue to face the impacts of the COVID-19 outbreak on jobs and migration.

Tim Lawless, head of research at CoreLogic, said the weakest rental conditions are in inner-city precincts where both supply and demand shocks are having negative impacts on rents.

"These precincts have recorded a surge in new unit supply over recent years, while more recently demand has fallen sharply due to stalled migration and weaker labour market conditions across industries where workers are more likely to rent," he said.

However, it is interesting to note that not all capital cities have weak rental markets. In fact, Perth and Darwin have been on a steady recovery since their weakness during the post-mining boom.

"Rising rental rates are a symptom of tight supply due to low levels of investment and residential construction activity over recent years, while demand looks to be improving," Lawless said.

In terms of market segments, units remained as the major drag on overall rents. Over the quarter, rents for units declined by 1.9% while houses recorded a 0.5% growth.