"Obviously many people are worried about keeping a roof over their head, but I don't believe something like a rent strike will ultimately help either party," Mr Perrottet said. "This is a complicated area and both sides face challenges, and I urge landlords and tenants to work together to find solutions at this extremely difficult time." Rents are expected to drop in coming months, experts say, as a surge in rental properties combines with a drop in tenant demand due to the economic impact of COVID-19. The number of rentals hitting the Sydney market over the past three weeks was up 18 per cent year-on-year, according to Domain figures. A return of short-term holiday rentals to the longer-term market, a change in tenant circumstances and a drop off in migration are all behind the jump, according to Domain senior research analyst Nicola Powell.

Loading "The big question is if this is going to continue. If it does, we will see downward pressure on rents," Dr Powell said. Median Sydney asking rents rebounded over the first quarter — after reaching their lowest levels in years — according to the latest Domain Rent Report, but the turnaround could be over before it's truly begun. Median rents rose 1 per cent for houses to $530 a week, and 2 per cent for units to $520 a week, off the back of a fall in unit completions at a time of steady population growth, Dr Powell said. House rents are still $20 lower and unit rents $30 lower than the 2017-18 peak.

"Sydney house rents rose for the first time in three years and unit rents rose for the first time in two years ... [but] this trend is expected to be short-lived," Dr Powell said. Meanwhile, Sydney's vacancy rate rose 20 basis points in March to 2.7 per cent, after trending down since mid-2019. There were an estimated 14,528 vacant rentals at the end of the month – 845 more than the previous month, with some landlords already slashing rents by hundreds of dollars a week to attract tenants. Investors with vacant properties will be competing for tenants, Dr Powell said, so landlords with good tenants whose ability to pay rent has been affected will not want to lose them because of what will hopefully be a short period of uncertainty. While the federal government has put a moratorium on rental evictions for six months, it has left the provision of further rental assistance to states and territories. For now tenants are required to negotiate rent relief with their property manager or landlord – with mixed results.

Louis Christopher, managing director of SQM Research, expected vacancy rates to rise sharply over the short term and said asking rents were already starting to fall. "At one stage Sydney was recording annual rent declines of 5 per cent, and then towards the end of last year rents started to stabilise; it's very possible we could see yet another 5 per cent decline but we don't know yet, we need to see the fallout first," he said. Mr Christopher said vacancy rates would also be impacted by the number of new homes being completed. While completions are on the decline, an expected pull back in buyer and tenant demand could lead to an oversupply of new homes. He added rental markets in Sydney and Melbourne, which take the lion's share of net migration from overseas, were likely to take the biggest hit. Maria Carlino, the national head of property management at The Agency, has seen the number of rental listings across the eastern seaboard jump about 30 per cent in recent weeks.