Despite predictions of an oversupply and years of record-breaking apartment building, Sydney unit rents have surged in 2016, new data released on Thursday shows.

Apartment rents jumped $20 from $500 to a record $520 a week over the March quarter, according to Domain Group’s March Quarter Rental Report.

Now they are almost on par with the median weekly asking rent for houses, which remained unchanged at $530 a week.

Domain Group chief economist Andrew Wilson said the surge in apartment rents makes theories of an oversupply “highly questionable”, despite some lenders already placing restrictions on some high density areas.

Dr Wilson said Sydney was “chronically undersupplied” and rents would continue to increase.

Paying more rent now to live somewhere that’s a lot smaller was a big shock.Elise Cooper, Enmore renter.

Elise Cooper, 25, recently moved from a house in Annandale, where she rented a room in a three-bedroom house for $220 a week, to a one-bedroom apartment in Enmore. She shares the room with her partner, each paying $225 a week.

“Paying more rent now to live somewhere that’s a lot smaller was a big shock,” Ms Cooper said.

Their initial budget was $400 a week but everything they viewed was “dodgy, dirty or old”. They eventually increased their budget and found a unit that was close to brand new.

Despite being surprised by the cost, they thought it was worthwhile considering the state of the apartment and the proximity of the inner west to the city.

Inner west apartment rents increased 1.9 per cent over the quarter, but the strongest rental growth by region was the northern beaches, with a 2.6 per cent increase to $595 a week.

PK Property’s Peter Kelaher said strong rental growth on the northern beaches is reflective of a beachside lifestyle that renters are willing to pay for.

“The age group 22 to 30 that has grown up on the beaches are all moving out of home but can’t afford to buy and are getting thrown into the rental market,” he said.

University of NSW City Futures Research director Bill Randolph said the figures were a “surprise”, but could be a result of investors increasing their asking rent as the broader market slows.

“Property prices in the frothy apartment market probably are falling back and landlords may well be adjusting their total returns balance between rents and lower capital growth,” he said.

But in some areas apartment rents are actually slipping, providing renters an opportunity to save money.

First Home Buyers of Australia co-founder Taj Singh, 26, recently moved from a Castle Hill house, paying $950 a week in rent, to a newly-built apartment in Baulkham Hills for $490 a week. He’d negotiated the rent down from $530 a week.

“It hasn’t been lived in before, but it was half the price, it was a no-brainer,” Mr Singh said.

“We’re moving as there were a lot of ongoing costs [at the house], with maintaining the garden and lawn mowing, it was costing time and money,” he said.

In The Hills Shire, apartment rents dropped 1 per cent over the March quarter.