Rents on apartments in major urban centres are nearing the price of leasing an entire house, as migrants add to demand for inner-city living.
Across all capital cities, asking rents for units surged 5.5 per cent in the June quarter, compared to a 2.7 per cent rise in median weekly advertised rents for houses.
The June quarter report from property firm Domain showed asking rents in Sydney hitting $700 a week, a little above $670 for apartments.
Domain chief of research and economics Nicola Powell said the price gap between houses and units was also closing in Brisbane and Perth.
"This narrowing in the price gap is a reflection of the heat in the rental market right now - with affordability constraints driving greater demand to units, and overseas migration bolstering demand in inner-city locations often dominated by units," Dr Powell said.
A separate report from CoreLogic backed up this finding, with the firm's data suggesting the gap between house and unit rents was $34 a week.
Both the Domain and CoreLogic reports revealed a rental market still firmly favouring landlords.
But vacancy rates ticked up from record lows, suggesting competition for rentals was losing some of its bite.
Dr Powell said several factors could be driving up vacancy rates, including more flat-sharing and larger households, as well as more tenants opting for more affordable locations or property types.
But she said the "rental pressure cooker" had not gone away, with strong population growth colliding with a slowdown in home building.
More renters are also finding themselves stuck in the rental market longer as buying a home remains unaffordable.
"With a number of factors at play, there needs to be a seismic shift in supply to address the challenges being faced," she said.
