(Bloomberg) -- Australia’s housing rental value hit a fresh record in April with some cities seeing renewed growth momentum, a troubling sign for the Reserve Bank that’s likely to leave borrowing costs at a 12-year high this week to stave off price pressures.

Median dwelling rent was A$627 ($413) per week nationwide, as of April, up 8.5% from a year ago, data from property consultancy CoreLogic Inc. showed. Sydney was the most expensive market to rent at A$770 per week, followed by capital Canberra at A$674 and mining powerhouse Perth at A$669 where the annual rate of growth was also the strongest of all capital cities.

“Part of the reason for the re-acceleration in rents nationally could be due to renters being forced into more affordable, peripheral housing markets as they become priced out of more desirable and central metropolitan locations,” said Eliza Owen, an economist at CoreLogic.

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The latest data may add to worries for the RBA which is facing the prospect of high-for-longer price growth and interest rates. From a year ago, rent inflation rose 7.7% in the first three months of 2024, remaining around the highest in the 30 years the RBA has been targeting inflation, data last month showed.

The RBA will announce its rate decision on Tuesday at 2.30 p.m. in Sydney, with all-but-one economists expecting it will maintain the cash rate at 4.35%. 

Supply and demand pressures remain high across Australia’s rental market more broadly, CoreLogic’s findings showed. 

Considering an average household size of 2.5 people, net overseas migration levels implied new household formation of over 200,000 in the 12 months to September 2023, CoreLogic’s research found. Yet, only 173,000 new dwellings were completed in the same period, creating a gap of 30,000 homes.

“Given there is little that can be done on the supply side for renters in the short term, reprieve in the rental market is most likely to come from a moderation in net overseas migration,” Owen said. “Centre for Population forecasts indicate this could occur from next financial year.”

A separate government report released on Friday saw the following: housing prices and rents are growing faster than wages, rental vacancies are near all-time lows, 169,000 households are on public housing waiting lists, 122,000 people are experiencing homelessness and projected housing supply is very low.

“Australia’s housing market is far from healthy,” the report said. “An unhealthy market has periods of rampant price growth, is unable to produce enough supply to meet demand, is overly reliant on an unsupported private market to address most of Australia’s shelter needs, creates scarcity and cannot match the rich expanse of demand with a breadth of housing choice.”

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