Sydney tenants are facing the highest house rents on record and unit rents are set to reach fresh highs by the spring, new figures show, with experts warning of housing stress on the horizon.

The median weekly asking rent for houses jumped $20 a week, or 3.3 per cent, to $620 in the June quarter – a record, the latest Domain Rent Report, released today, shows.

Units had an even sharper increase of $25 a week, or 5 per cent, in the same period, jumping to $525 a week.

House and unit rents have jumped by more than 11 per cent each in the year to June, outpacing annual wage growth almost five times, in one of the biggest cost-of-living pressures to households already facing the high cost of petrol and other essentials.

Sydney’s rental market has reached this new extreme due to a combination of the limited supply of homes to choose from as the city’s vacancy rate remains at a record low of 1 per cent and some investors sell up, plus demand from priced-out buyers, interest from international students and returning migrants filtering back into the market, as well as new households forming that prefer single living rather than share housing during the pandemic.

Domain chief of research and economics Dr Nicola Powell said it was a stark contrast to the start of the pandemic.

‘‘If you compare March 2020 to June 2022, house rents are up 19.2 per cent,’’ Powell said.

But units were only up 1 per cent in the same period, she said, with unit rents accelerating since the start of this year as more people chose them for their relative affordability.

‘‘House rents have reached a record high for each quarter in the past year and a half. What’s become more apparent, particularly over 2022, we’re certainly seeing demand steered towards units rather than houses because of affordability constraints,’’ Powell said.

‘‘It’s the first time in 14 years units have risen at the current annual pace. If we see units continue at their current rate they will reach a record high in the next quarter.’’

Powell said households would find rental increases ‘‘extremely challenging’’ as the cost of other essential goods and services was up too.

‘‘It’s likely we’ll see more households shift into rental stress. This is a broad-based lift we’re seeing in Sydney. There are some areas that have remained below their rental peaks, but with escalating costs of living for essential items, it does put households under pressure,’’ she said.

Westpac senior economist Matthew Hassan said the return of international students and other migrants was starting to have some impact, with numbers in Sydney now tracking between 30 per cent and 40 per cent of pre-COVID levels.

He said demand could reduce once renters who are waiting for new homes to be built are able to move out of their rentals.

‘‘That could siphon off some demand in the rental market.’’

Inner west renters Jess Brooker and Rhiannon Earl took two months to find a suitable home and only after a rental budget increase from $600 to $700 a week, which costs them between 30 and 40 per cent of their incomes. ‘‘For our initial price range we couldn’t find anything liveable,’’ Brooker said. ‘‘We were looking for a twobedroom place because I work from home and my girlfriend works in the office full-time.’’

The city’s rental market is so competitive that in many instances the couple were asked for a deposit before an inspection in order to secure the property.

‘‘You have to apply before you actually see it, and then they will want the deposit that day; otherwise you get knocked back, and the deposits were nonrefundable,’’ Brooker said.

The inner west had the highest quarterly increase to weekly rents, jumping 6.7 per cent to $800 in the three months to June.

Tenants’ Union of New South Wales chief executive Leo Patterson Ross said Sydney still had a fundamentally undersupplied rental market, which had never improved during the pandemic.

‘‘The falling rents [during the pandemic] were largely because people were falling into economic crisis. It wasn’t because of an abundance of affordable housing. It was because of people losing their jobs,’’ Patterson Ross said. Ongoing economic uncertainty would cause renters hardship in coming months, he said.

LJ Hooker Group’s Nick Georges said the city’s housing boom was the main cause of the rises, which had locked out potential buyers. With Melissa Heagney