Hobart has overtaken Sydney as the country's least affordable city for renters.
After overtaking Sydney as Australia's least affordable city for renters, a housing gridlock in Hobart has placed even further pressure on tenants, a new report reveals.
The Rental Affordability Index, published on Thursday, has found average rentals in metropolitan Hobart are now unaffordable to median rental households after rental affordability dived even lower during winter.
Working families now pay around 30 per cent of income on rent, meaning they face rental stress and are unable to save sufficiently for a mortgage deposit, according to the report.
Adrian Pisarski, Executive Officer at peak housing advocacy group National Shelter, says an increase in short-term rental accommodation due to a tourism boom has put even more pressure on the city.
"It's a major tourist destination with a relatively small rental market," he told AAP.
A lot of interstate migrants over the past five years has also increased demand, Mr Pisarski said.
Joshua Vallelonga, an office worker in Hobart, has been searching daily for a place to rent on his own since he moved from rural Victoria two months ago in the hopes of a better "work-life balance".
The 29-year-old, who has been staying in a sharehouse, says competition for rental properties has been fierce and it has been impossible to find an affordable place to call home.
So far many of the properties close to work that avoid commuting costs would eat up half of his income, leaving no room for savings and a tighter budget for food and utilities, Mr Vallelonga told AAP.
"I viewed living in a share house as a short term solution, but it's getting more obvious that it's going to be a longer term solution," he said.
If Mr Vallelonga could not find a rental property and had to move out of the share house, a hostel was his next option, followed by a move back to rural Victoria.
"These are things I've had to think about, which I haven't had to think about in the past," he said, adding that he had spent four years renting in inner-Sydney.
The report shows Sydney remains the second least affordable city, despite a marginal improvement over the past year.
In Melbourne, the list of unaffordable suburbs to rent has spread further from the centre over the past year, while Adelaide suffered the sharpest decline in rental affordability out of all the cities.
Pensioners, single people on benefits, single mothers and men living alone were hit particularly hard, the report found.
In Sydney, a single pensioner living with an average annual income of $27,329 would spend 90 per cent of their income on rent for a one bedroom dwelling.
They would have to move to regional South Australia to find accommodation that would not force them into rental stress, the report said.
The biannual study is published by National Shelter, Community Sector Banking, the Brotherhood of St Laurence and SGS Economics and Planning.
RENTAL AFFORDABILITY IN CAPITAL CITIES FROM WORST TO BEST
* Hobart - 30 per cent of household income spent on rent
* Sydney - 27 per cent of household income spent on rent
* Adelaide - 26 per cent of household income spent on rent
* ACT - 24 per cent of household income spent on rent
* Brisbane - 24 per cent of household income spent on rent
* Melbourne - 24 per cent of household income spent on rent
* Perth - 21 per cent of household income spent on rent