The price for a rental property in the Illawarra has soared by 9.5 per cent in the 12 months to September, new figures from CoreLogic show, with the median rental price now sitting at $577 per week.
A total of 27 suburbs recorded an annual increase in rental prices of 10 per cent or more over the year.
Combined rental prices for houses and units increased the most in Cringila, up 16.4 per cent across the year to sit at a current median value of $519 per week.
There were also large increases in Kiama Downs, up 13.6 per cent; Stanwell Park, up 12.9 per cent; and Mount Warrigal, up 12.1 per cent.
The most expensive suburb to rent a house is Calderwood, at $1269 per week, while the most expensive suburb for units is Shell Cove, at $614 per week.
Rents for both houses and units are cheapest in Warrawong, where the median weekly rental is $505 per week for a house and $353 for a unit.
Only two markets recorded an annual change in rents of less than 5 per cent: Kembla Grange, where the median dwelling price increased by 4 per cent to $559 per week, and Wongawilli, where rents increased by two per cent to $574 per week.
The new figures come as the rental market throughout regional Australia continues to tighten, with strong outward migration from capital cities and the conversion of rental properties into main residences resulting in depleted supply and huge levels of demand.
The combined rental figure for all regional markets clocked a 12.5 per cent increase, the largest annual rise since CoreLogic began collating regional data in 2005.
City rents grew by 7.5 per cent during the same period, the largest increase since 2009.
Regional dwelling rents rose 2.2 per cent over the September quarter, compared to a 1.7 per cent rise in capital city dwelling rents.
The median rental price in the regions is now $454, while it is $500 in the combined capital city markets.
The Sunshine Coast region recorded the largest annual increase in rents for non-capital city markets, at 20.3 per cent, with the Murray region in NSW close behind on 19.8 per cent.
Regional unit rents recorded a larger increase than houses across the year and the quarter, up 13.2 per cent and 2.4 per cent respectively.
By comparison, regional house rents recorded 12.3 per cent annual growth and 2.2 per cent quarterly growth.
CoreLogic research director Tim Lawless said the numbers were a reflection of regional migration patterns during the COVID-19 pandemic.
"Demographic data is showing a clear trend towards regional population growth, driven by a combination of more people leaving cities for the regions, but also fewer people moving from the regional areas to the capitals," he said.
"With regional housing rents rising 12.5 per cent over the past year at a time when household incomes have hardly budged, it's likely that rental affordability is becoming a lot more challenging in some of the most popular regional markets."
A desire for home office space, and an avoidance of share houses, could also be driving rents up.
These factors "could be driving a trend towards smaller rental households as tenants look to maximise their space and working environment during COVID," Mr Lawless said.
An increase in private investor activity may signal that more rental supply is on the horizon, Mr Lawless said.
Investors made up only 23 per cent of housing market activity in January this year but that had increased to 31 per cent in August.