Rental pain continues to grow across the Harbour City as scarce supply drives competition, leading to higher rents.

The latest PropTrack Market Insights report shows that Sydney's median advertised rent rose 3.3% between April and June to $620 per week, $100 higher than the national median. This represents a 13.8% increase compared to the June 2022 quarter.

Sydney unit rents rose a staggering 3.5% in the quarter, a 19% year-on-year increase that PropTrack describes as "the most significant annual increase of any property type and market in the country."

Median unit rents in Sydney were also 19% higher than before the pandemic.

Sydney home rents remained stable in June, but are up 6.3 percent since the same time last year.

"The unfortunate news for Sydney renters is that we continue to see rapid growth,"

said PropTrack economist Angus Moore.

"If you compare that to a year ago, rents are up double digits, which is very fast by any standard. Especially for units, which have gone up nearly 20 percent in the past year, that's pretty impressive growth."

Part of the story for units is catching up after rents fall during 2020-2021, he said.

"The other reason is that there is extremely strong demand for rental units and very little available," he said.

"We like to use rental vacancy rates as a measure of rental availability. It depends on the month you're looking at, but in the first half of this year, Sydney's vacancy rate was roughly 1.5 percent. That's about half or less of what it was before the pandemic.

"It means there's not a lot of rental properties, and once they become available, they're rented out quickly, which means there's more competition, and rents go up as a result."

Mr. Moore said rents will continue to grow in the coming months because of low vacancy rates.

"Whether they grow at the kind of eye-popping rates we've seen in the past year is a different question," he said.

However, the silver lining, he said, is that the rental stock is growing.

"We're seeing a larger share of new mortgages than we did during the pandemic, and we're also seeing more new rental properties entering the market and fewer being sold," he said.

It's a slow adjustment, and the number of new investors in any given month is quite small relative to the total size of the rental market," he said. As a result, it will take some time for this to have a significant impact on rental supply."

Meanwhile, home rents in the NSW region fell 3.6 percent during the quarter to $530 per week.

"The good news for area renters is that after three years of rapid growth, rent increases appear to be moderating," Mr. Moore said.

"Median rents were flat in June, and unit rents even declined slightly. This

slowdown in rent growth is consistent with improved rental supply in the regional market.

Rental supply in regional markets has improved.