Rent in Warrnambool has soared by more than 11 per cent over the past year to a median price of $400 a week, new data shows.
That puts the median rent just $10 behind the Geelong region which dominates the list of most expensive in regional Victoria.
By comparison, the median rent in Bendigo and Ballarat is $340.
A Real Estate Institute of Victoria spokesperson said Warrnambool had one of the highest annual growths on its median house rents - up 11.1 per cent.
"There are only 18 regional towns with at least 10 per cent annual growth," he said.
The spokesperson said the median house rents in Warrnambool were "pretty high" with towns from greater Geelong dominating the top list for expensive rents.
In January, the REIV sounded a warning that new Victorian government regulations would lead to rent increases, something Warrnambool real estate agent Mark Dwyer has been saying since it was first mooted.
More than 120 new landlord obligations came into effect on March 29, just as a COVID-19 rental moratorium ended.
Two years ago, the Ludeman Real Estate director said the new laws would drive investors from the market and leave less properties for rent, and now that was starting to happen.
"Even I could see it was coming. I could see it was only going to get worse," Mr Dwyer said.
And with property prices also soaring, more investors were taking advantage of the high prices and selling out.
"It's a real worry at the moment," Mr Dwyer said.
He said "without a doubt" the rule changes - which had swung "too far in favour of the renter" - were partly to blame for the crisis.
"Landlords aren't happy and the prices are good so they're taking that opportunity to sell and it's causing a shortage," he said.
"This has been forced by the rule changes. What was designed to help renters is working the opposite.
"To me it's very obvious what's happening but no one seems to want to mention it. It all comes to supply and demand."
Mr Dwyer said he felt sorry for tenants, and the number of complaints about rent increases were "a lot more than usual".
"I've had people ringing me saying 'I can't afford to pay the rent'," he said. "We feel for them but the market dictates what it costs to rent a property."
Mr Dywer said rent hadn't been keeping track with price value of housing.
"In some cases, if they've been a little bit under rented and they've been sold to a new rent provider, and he wants the going rate, it could be a $40, $50 a week increase," he said.
"The rents haven't gone up for a long time, because of COVID, they weren't allowed to put them up and now that's changed. It was always going to happen."
While Warrnambool's rental situation had been in crisis mode for more than two years, Mr Dwyer said it was "drastic now".
REIV CEO Gil King said it had been warning policy makers of the consequences of the changes.
"New costs introduced through these changes are likely to result in higher rents and could see Mum and Dad investors exit this asset class, putting further pressure on rental availability and affordability for Victorians."
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