The situation is causing so much concern that Australian Premier Nathan Rees is to meet with the Real Estate Institute for crisis talks as new figures reveal that desperate tenants are vying for only 739 available rental properties on the market across the whole of the city.
One in three agents are reporting either themselves or their staff have been abused and attacked. Some agents said they had called police to remove irate would-be tenants from their offices and were being abused on a daily basis.
Others said tenants had been in tears because they felt they could not compete with the number of people looking for properties. Police have also had to be called to sort out traffic congestion as up to 30 or 40 applicants turn up for open house inspections.
'It is the worst we have ever seen. The situation is now so grave we are unfortunately experiencing incidents of rental rage,' said REI president Steve Martin. Its figures show that Sydney's overall vacancy rate is just 1.2%.
'People have become so desperate to secure a property that agents have been offered bribes and even had prospective tenants break down because they cannot compete with the number of people looking for properties,' he added.
Mr Martin said the demand for rental properties had outgrown supply by about three to one with Sydney's population growing at more than 1400 a week. Mortgage defaults have also forced more families into the rental market.
He wants the government to ease measures which are slowing the market. Punitive taxes including stamp duty and land tax, coupled with a lack of land being released for new development, have been blamed for the stagnating market.
The institute has proposed that the State Government scrap the contentious land tax and offer investors a full rebate of their stamp duty over seven years with a partial rebate if they sell before that.