The south-west has made the list of top performers in the state for rental returns, with a number of towns being singled out.
With rental returns high on investment properties and buyer demand driving up the prices of housing, one real estate agent has described the market as the best he'd seen in his 30-year career.
The Core Logic data lists Mortlake, Warrnambool and the south-west as having the greatest change in rent for houses over the past 12 months - 15.7 per cent - and is also listed as having the highest rental yields in the state of 9.2 per cent.
When it comes to units, Portland, Warrnambool and the south-west makes the list of top performers in the state with rental yields of 7.1 per cent.
While the high returns is good news for investors, it has made the real estate market tougher for renters.
CoreLogic's head of research, Eliza Owen, said the figures reflect a popularity of lifestyle markets with regional Australia out-performing the combined capital city market.
"With the exception of the highest median value suburbs, our Best of the Best report is dominated by high performing regional areas across the country," she said.
While closed borders have meant a drop in rental demand for major cities, it is a different story elsewhere.
"Following the long withdrawal of investor demand and several years of low new supply additions, rental markets are tightening," Ms Owens said.
Ludeman Real Estate director Mark Dwyer said there still wasn't enough houses for rent or sale in Warrnambool.
"It's the best market I've seen in 30 years I've been in real estate," he said.
"We can't get enough rentals or properties for sale either. I think the last five properties we had listed never got advertised. We've got that many buyers, we're contacting our buyers before we're putting them to the market.
"We don't really have to advertise at the moment. It's incredible."
While the Corelogic data put rental yields at 9.2 per cent, Mr Dwyer said that wouldn't be the case in Warrnambool where it was closer to six per cent.
"There was a time we were getting eight-plus per cent, but we wouldn't be now because the house values have gone up too much," he said.
Portland Seaview Real Estate director Allan Barrett said there had been a jump in rental prices over the past 12 months with the sale prices of properties also starting to climb.
He said the sales market had been "quite active" and a lot of rental properties were also being sold and that's pushing up rental prices because there are less rentals available.
"It's really just supply and demand. We did have people exiting out of the investment area over the last three or four years and more demand for properties to buy and live in," Mr Barrett said.
"Portland was always one of those ones where people had investment properties probably by default rather than choice."
He said people who were unable to sell their properties when they moved away were forced to rent them out, but now buyers are snapping them up.
Mr Barrett said retirees looking for affordable housing had driven the market the past few years with many renting them out as holiday houses until they were ready to move there permanently.
"We've got a few developers floating around that we're selling some sites to, and they're looking at building apartments. They're the other major demand."
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