Domain chief of research and economics Dr Nicola Powell said the rental price growth across the combined capital cities remains on its longest continuous stretch on record despite the market showing signs of slowing.

“The colliding mismatch of heightened demand and supply side constraints has continued to place pressure on house and unit asking rents across Australia,” she said.

“This has resulted in records being set in most capital cities, including the longest stretch of continuous rental price growth on record for Melbourne house and unit rents, together with houses in Adelaide and units in Sydney and Brisbane.”

Interestingly, the growth in Sydney’s rents make it the most expensive city for tenants for the first time since 2018.

On the other hand, house rents in Canberra fell annually for the first time since 2014 while those in Hobart declined for the first time in a decade.

Still, despite the slowing in some markets, Dr Powell said key factors continue to contribute to a tight rental market, including the quicker-than-expected return of international students, revival of overseas migration, and more tenants opting to rent due to affordability constraints of homeownership.

“With a number of factors at play, there needs to be a seismic shift in supply to address the challenges being faced — in fact, our research shows that more than double the rental listings needed today to create a balanced rental market,” she said.

Based on estimated, around 127,000 additional dwellings will be needed this financial year alone to meet the demand for rental properties.

“There is no one-size-fits all solution to these challenges — rising investor activity is needed, the build-to-rent sector advanced, additional rental assistance provided for low-income households, more social housing and assisting tenants transition to homeowners," Dr Powell said.