Rents in most Australian state capital citieswill rise by 50 percent over the next four years due an undersupply of housing,a report released Friday said.

Major cities across the nation have already seen double-digit percentage rises in rents in the past few years as advertised rental listings dropped to a five-year low, Australian Property Monitors (APM) said in its March report.

"Expect conditions for renters to worsen, as APM forecasts a 50 percent rise in rents in most capital cities over the next four years," it said.

Housing shortage driving up rents

APM general manager Michael McNamara said the rental market was stretched to the limit and would become even tighter due to a lag in building.

"Our construction sector struggles to keep up the supply ofwell-located, affordable property to accommodate a growing population of renters," he said.

"This is not good news for renters... we advise renters to lock in their current arrangements for as long as they can."

McNamara said high mortgage interest rates were also deterring people from purchasing their own homes.

A survey by insurance company AAMI found that rents in Australia's most populous city, Sydney, rose by 11 percent in the year to March to a median 390dollars (358 US) per week for a house.

In the southern city of Melbourne, house rents increased by 17 percent to 350 dollars per week, it said.

Government says home ownership still a reality

Meanwhile, Federal Housing Minister Tanya Plibersek says the Australian dream of home ownership is still a reality despite an affordability crisis.

It has been estimated that more than one million Australians are currently in "housing stress", meaning at least 30 per cent of their income goes on housing costs.

Ms Plibersek said the situation had escalated to "a very serious level".

"Australia has some of the least affordable housing in the world ... and that situation has been getting worse," Ms Plibersek told Sky News.

But she denied the dream of home ownership was unachievable for people looking to get into the market.

"No, I'm not prepared to accept that," she said.

"We have to be realistic about the types of homes that people will have.

Government 'determined to find solutions'

Ms Plibersek said there was "no silver bullet" to the problem but the government was determined to ease the crisis.

Solutions included increasing the supply of affordable rental accommodation and establishing First Home Saver accounts to help people save a deposit for their first home, she said.

Home ownership was the real key to families feeling they had economic security. It was also a very important cornerstone of retirement.

"If people have paid off their own home when they retire they are much better off financially, emotionally and socially as well."


Source: AFP, AAP