Forget about mortgage stress – if you are looking for a real crisis in Australia at the moment, it is hard to go past the rental market.

If you find yourself leaving private rental accommodation at the moment, you are in serious trouble with a combination of super-low vacancy rates and flying rental increases making the search for a new place perilous indeed.

The announcement by China that students needed to go back to in-person learning – in many cases at Australian universities – was the last straw for a market that was already showing serious strain.

Already market rents have risen by an average of 37% since the start of 2020, meaning they are gobbling unprecedented percentages of renters’ wages.

The old rule of thumb that paying more than 30% of your income to rent is a sign of rental stress comes at a time when many tenants can only dream of attaining such a “low” percentage.

In the last year alone, rents have risen by 14.6% for houses and 17.6% for units as the vacancy rate has fallen to unhealthy levels.

Normally a healthy vacancy rate will be around 3% to allow for people moving in and out of the rental market, but that rate has fallen to 0.8% nationally and dramatically tightened from 1.4% to 1% in Sydney and Melbourne during January.

It is very much a national problem too, with the vacancy rate below 1% in Brisbane, Perth and Adelaide and 1.5% in Canberra and 1.3% in Darwin.

The rapid return of Chinese students threatens to make all of these indicators worsen from already highly stressed levels and will certainly keep upward pressure on prices.

Even those who are in long term rentals will now be dreading large annual price increases as landlords pass on rising interest and other costs and also try to keep their properties in line with the current higher rents.

First home buyer activity has weakened significantly due to rising interest rates, which is keeping more people in rental properties and migration in 2022/2023 is set to rise from 160,000 to 195,000 people.

On the supply side, things are very weak, with few signs of a new rental homes arriving and evidence that some rental properties were sold and became owner occupied during the pandemic peak due to high prices.

Social housing has been on the wane for decades and most of the measures announced so far will take a long time to impact the current crisis, which has seen massive lines form to inspect rental properties and tenants pitched against each other to pay higher rents.

The Albanese Government has announced a national housing accord with states and territories to free-up land and build a million homes in five years, backed by the investment of $3.4 trillion by superannuation funds but that won’t make a dent on the current miserable state of the rental market for a long time.

At the moment, the private rental market is a perfect example of what happens when reducing supply meets rising demand – prices rise and the market dramatically tightens.

Hopefully current high rents will also be a stimulus to increase the rental supply, but the response is likely to be slow and take years to make a difference, so renters look set for the current misery to continue for some time to come.