Budgets will be tight this Christmas for many tenants, with new analysis revealing the soaring cost of rent in regional NSW over the past year.

The latest SQM Research Weekly Rents Index for combined units and houses found that asking rents across the regions have surged between $17 and $70 per week since November 2021 with a 13.5% increase in rents for houses in the Dubbo to Broken Hill area.

These significant hikes in rent have been spurred by inflating interest rates, forcing landlords to squeeze more from their tenants just to keep up with their interest bills. Meanwhile, inflation is yet to reach a peak and wages aren't keeping up.

For tenants with low and modest incomes, fear is setting in.

“It’s been a shocking, challenging year for regional NSW tenants," said Everybody’s Home national spokesperson Maiy Azize.

"“Having a roof over your head is choking household budgets ahead of what is already traditionally an expensive time of year. Sadly, many will likely rein in the festive celebrations simply because they can’t afford it and don’t want to risk becoming homeless," she said.

In Condobolin, like many other small regional towns, a shortage of supply is leaving many without a comfortable place to live.

"There's a massive shortage of rentals, particularly good rentals," said local Real Estate Agent, Paddy Ward.

"There's also a huge shortage of vacant blocks to build on, so there's all these old ones that aren't up to standard anymore and are literally falling down," he said.

Long waiting periods for builders, expensive house prices and rising inflation are all deterring investors from the town's real estate market, leaving those looking for a rental out in the cold.

"You wouldn't be able to get anything in Condo under $200 a week, even for a little one bedroom flat," said Mr Ward.

"Prices will keep going up as landlords demand more money to keep paying their interest bills and tenants won't be able to afford to buy a house so they'll just have to put up with it," he said.

While Mr Ward is concerned that rental negotiations will become more frequent as interest rates continue to rise, Ray White's Chief Economist, Nerida Conisbee cautions that the so-called 'rental crisis,' does not extend to secure leases as much as it does to those still looking for somewhere to lease.

"Although landlords could theoretically take their property to market and achieve a better rent, they aren’t doing so right now," said Ms Conisbee.

Her analysis was derived from the Australian Bureau of Statistics, where data showed a large disparity between market rents (i.e advertised rental prices) versus existing or CPI rents (i.e the price actually being paid).

SOURCE: raywhite.com

"Fundamentally what seems to be happening is that tenants with leases already signed are not paying market rents," she said.

"The main reason is that it likely takes some time for the sharp increase in advertised rents to show up in sitting rents. Leases are typically signed for 12 months and rent increases for sitting tenants also can’t be implemented immediately and there is a notice period that must be given"

"The second is that having a stable tenant that looks after a property and pays their rent on time is valuable for a landlord, and the risk of losing that tenant may not be seen as worthwhile even if better rents are possible if they take the property to market."

"The third is that the process of re-letting a property may be seen as time consuming and expensive for the landlord so again, not worthwhile for extra rent."

However, for those still looking for a decent place to rent at an affordable price, it's a much gloomier situation.

“Rental stress is the passageway to homelessness," said Everybody’s Home national spokesperson Maiy Azize, who is placing urgent pressure on the government to fund more affordable housing.

"Living standards are deteriorating and there aren’t enough houses to accommodate all Australians. We urgently need to expand social and affordable housing for people on low and modest incomes," she said.

“We’ve seen positive progress this year with the Federal Government announcing its landmark National Housing Accord, which includes a target to build one million well-located homes over five years from 2024.

“But time isn’t on our side. People are suffering so we need shovels in the ground now to rapidly deliver at least 25,000 social and affordable housing properties across Australia annually.”

As efforts from the Reserve Bank of Australia (RBA) to stomp runaway inflation are expected to continue into the new year, the flow-on effect to low income households will result in a much more basic Christmas Day for many.