Major cities will be hardest hit as rental prices are "likely to continue increasing at a rapid pace."

With a new report from property data group PropTrack warning price hikes are only just beginning, Australia's rental crisis is predicted to worsen.

The report paints a gloomy picture for struggling households, suggesting that the situation may already be worse than currently believed given the limited supply and soaring demand.

Rent increases are most noticeable in capital cities, where prices increased 13% by the end of March compared to the same period last year.

The median weekly advertised rent in Australia is $500 per week, up 11.1% over the previous year.

PropTrack issued a warning, predicting that as migration increases and competition for properties rises, prices will rise further and possibly faster.

"Rental prices are likely to continue increasing at a rapid pace over the coming quarters, particularly in the major cities," the report stated.

"A key issue is the migration rebounding quickly and the lifting of temporary student visas, which will increase competition for rental stock."

High borrowing costs are a barrier for renters who want to take out home loans and make the switch to home ownership, and high interest rates and rising costs of living are both contributing to these issues.

Renters are encouraged to stay put as a result, which limits supply and presents a "challenge" for policymakers trying to provide relief.

The housing market in Australia has long-standing and well-documented supply issues.

However, with migration anticipated to rise after the remaining pandemic-era restrictions are lifted, it is likely that the supply issue will only get worse.

In a panel discussion organised by the National Housing Finance and Investment Corporation on Wednesday, Tarun Gupta, the CEO of Stockland, the largest housing developer in the nation, raised significant concerns about the growth of migration.

According to Mr. Gupta, it typically takes new arrivals "three to four years" to obtain employment, a credit history, and the down payment necessary to purchase a home, necessitating their reliance on the rental market in the interim.

Property investors will benefit from rents raising because it increases their returns on investment through higher rental income. This means that if the value of the property rises, the investor will be able to receive a higher return from their rental property, which can increase their profits on their investments. Additionally, as rents increase, the value of the property also increases as demand for rental properties in the area increases. This can also increase the investors potential profits if they decide to sell the property.