According to CoreLogic's rent value index, rates rose 1.6% over the September quarter, and 8.4% through the year.
Rent in Australia has now risen for 38 consecutive months, with rental values 30.4% higher than June 2020.
The chronic undersupply of rental properties continues, with record net migration and a persistent shortfall in listings combining to push vacancy rates nationally to 1.1%, a new low.
Over the four weeks to 1 October, there were 90,153 properties listed to rent, the lowest since November 2012.
The capital cities are the primary drivers of rates going up, taking in the majority of migrants, with the combined capital rents rising 1.9% quarterly compared to 0.7% for regional Australia.
Sydney (up 1.7%), Melbourne (up 2.3%), Brisbane (up 2.5%), Perth (up 2.5%), Adelaide (up 1.7%) and Darwin (up 3.3%) all saw rental rates increase over the quarter.
Hobart (down 2.7%) and Canberra (down 0.9%) continued to bucked the trend, with both cities experiencing negative rental growth throughout the past year.
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Rental affordability capping growth
The 1.6% increase to rents was a 60 basis point drop from the 2.2% that rates rose during the June quarter, despite record low vacancy rates.
Increases throughout the past three years mean rents for many Aussie tenants have become prohibitively expensive, which is likely slowing growth.
CoreLogic economist and report author Kaytlin Ezzy believes many have hit an affordability ceiling, and are having to change their living situation to ease the burden of high rent.
"With the rising cost of living adding additional pressure on renter's balance sheets, it's likely the average household size has continued to rise as tenants seek to share the additional rental burden across larger households," she said.
Earlier this year, then-RBA Governor Philip Lowe was criticised for suggested the solution for soaring rental rates was for tenants to get extra roommates or stay living with their parents for longer.
"As rents go up people decide not to move out of home, or you don't have that home office, you get a flatmate," Dr Lowe said.
"The increase in supply can't happen immediately, but higher prices do lead people to economise on housing."
Meanwhile, property prices continue to rise, the CoreLogic home value index recording 2.2% growth to Australian property values over the September quarter.
With property prices accelerating faster than rental rates, rental yields declined slightly, which Ms Ezzy says is likely to continue in the coming months, but she said this was unlikely to put off investors.
"Despite the easing in gross rental yields, the stabilisation of the cash rate, coupled with the prospect for capital gains, should help entice more investors back into the market," she said.
"This can already be seen in the ABS new housing finance data, with the value of new investor loan commitments rising 3.0% over the three months to August."
How many new rentals does Australia need?
Investors returning to the market will come as welcome news for Australia's tenants, who have a shortage of properties to choose from.
Ms Ezzy estimates the low number of listings through September equates to a shortfall of about 47,500 properties.
Dr Nicola Powell of Domain, which also released a quarterly rental report this week, believes it might be even more dire.
"Rental supply has suffered due to the sustained development undersupply and investors selling under
holding pressure costs," Ms Powell said.
"To balance the rental market and achieve a healthy vacancy rate of 2-3%, Australia needs 40,000 to 70,000 additional rentals," she said.
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