It's getting tougher for Sydney tenants, with rents rising at the fastest rate in five years in what experts say should be a "wake-up call" for the government.

In the 12 months to March, Sydney's median asking house rent increased $25 a week to $550 - meaning it's now hundreds of dollars more expensive for renters every year, Domain Group data shows.

And it's a "double whammy" for tenants, who have seen property prices surge, vacancy rates tighten and subdued income growth.

After this sharp rise, it's likely rents will start to level off - but the big question is when and whether it will be too late, Starr Partners chief executive Douglas Driscoll said.

"It really is impossible to say because we are in unchartered territory now," Mr Driscoll said.

The latest rent increase, at 4.8 per cent, is the biggest annual hike the harbour city has seen since March 2011, when rents jumped 6.5 per cent to $490 a week.

"Increasing rents will mean people have less disposable income, which will force parents and families to prioritise the necessities - a roof over their children's head, food and clothes - and have less to spend on luxuries."

While some would seek out affordable areas after being priced out of the inner suburbs, it's these cheaper rental locations that have largely seen the biggest surges in rent in the last three months.

House rents increased the fastest in Canterbury-Bankstown, while apartment rents surged the most in the south-west.

While these are gentrifying areas, they're also the recipient of renters who have been priced out of other areas, Mr Driscoll said.

He urged the government to look at negative gearing and capital gains concessions, "leaving scores of owner-occupiers and first-home buyers on the sidelines, forcing them to rent".

"We maybe need to consider limitations around how many properties investors can acquire and look at creative schemes for property ownership, like in the UK, where there is a shared ownership scheme," he said.

Limiting how many properties investors can buy has been investigated by the government, but slammed by policy experts.

Tenants Union of NSW senior policy officer Ned Cutcher also described the rising rental statistics as "worrying".

While the median asking rent isn't always what landlords end up achieving, he said it does reflect the general movement of the market.

"Median rents have risen faster than incomes," Mr Cutcher said.

"At some point, renters are not going to be able to meet the increases in rent because wages aren't keeping track and more people will move further out, or into share houses."

This would continue to cause rents to surge in typically more affordable locations.

"There's a point when those in the [currently] affordable areas then can't live there anymore."

Apartment rents also increased by 1.9 per cent to $530 a week despite expectations that a building boom would take the pressure off the rental market, Domain Group chief economist Andrew Wilson said.

"Vacancy rates are also falling, leaving tenants with the spectre of not having anywhere they can afford to live," Dr Wilson said.

"This is a wake-up call for policymakers. We need more rental properties."