The head of Housing Tasmania has told a parliamentary inquiry on housing affordability Tasmania has the tightest rental market of any state or territory.
Housing Tasmania director Peter White appeared at day one of the inquiry's hearings on Tuesday morning.
Mr White said pressures on the private rental market had been caused by a number of factors which included an increase in university student numbers, more visiting workers involved with infrastructure projects, and increased tourism numbers.
He said the property market by nature took a slow time to respond to increased demand for supply over a short period.
"When you look at the long-term, and you look at other jurisdictions, we have the tightest rental market of any jurisdiction across Australia at the moment," Mr White said.
He said there had been a decrease in vacancy rates over some time but this had improved in the past 12 months.
"In early 2018, we were looking at 0.7 per cent in the Hobart market whereas now it is around 1.5 per cent," he said.
Mr White said Housing Tasmania owned 12,504 properties within the state and had a 99.2 per cent occupancy rate.
Shelter Tas executive officer Pattie Chugg and low to medium income earners had to battle for affordable private rentals with people on high wages who wanted to save money to buy a home.
She said housing supply was at a crisis point at the affordable end of the property market.
"Nationally almost 80 per cent of housing stock that is built is priced at the upper end of the market," Ms Chugg said.
She said the myth of cheap housing in Tasmania had "well and truly gone" and cited rents in Hobart had gone up 50 per cent over the past decade, including 10 per cent over the past year.
Shelter Tas policy officer Cynthia Townley said the organisation was supportive of an investigation on benchmarks for rental increases.
She said the ACT was looking to change its benchmark to the Consumer Price Index plus 10 per cent.