Hobart’s popularity as a tourist destination has made it Australia’s least affordable city for renters, with short-term holiday accommodation pushing residential tenants out of the market.

The Rental Affordability Index, published on Thursday, has found average rentals in the Tasmanian capital are now unaffordable to many households after rental affordability dived even lower during winter.

It means Hobart has overtaken Sydney as Australia’s least affordable city.

Working families now pay about 30% of income on rent, meaning that they face rental stress and are unable to save sufficiently for a mortgage deposit, according to the report.

Adrian Pisarski, the executive officer at the peak housing advocacy group National Shelter, said an increase in short-term rental accommodation owing to a tourism boom has put even more pressure on the city. “It’s a major tourist destination with a relatively small rental market,” he said.

A lot of interstate migrants over the past five years had also increased demand, Pisarski said.

Joshua Vallelonga, an office worker in Hobart, has been searching daily for a place to rent on his own since he moved from rural Victoria two months ago in the hopes of a better “work-life balance”. The 29-year-old, who has been staying in a share house, said competition for rental properties has been fierce and it has been impossible to find an affordable place to call home.

So far many of the properties close to work that avoid commuting costs would eat up half of his income, leaving no room for savings and a tighter budget for food and utilities, Vallelonga said.

“I viewed living in a share house as a short-term solution but it’s getting more obvious that it’s going to be a longer-term solution,” he said.

If Vallelonga could not find a rental property and had to move out of the share house, a hostel was his next option, followed by a move back to rural Victoria.

“These are things I’ve had to think about, which I haven’t had to think about in the past,” he said, adding that he had spent four years renting in inner Sydney.

The report shows that Sydney remains the second least affordable city, despite a marginal improvement over the past year.

The suburbs of Milsons Point, Kirribilli, St Ives, Pyrmont, Point Piper and Rozelle remained the most unaffordable addresses in the country, with rents of more than 40% of the average Sydney income, which was identified in the report as $98,500.

In Melbourne the list of unaffordable suburbs to rent has spread further from the centre over the past year, with Brighton East, Albert Park and Port Melbourne among the least affordable.

Adelaide suffered the sharpest decline in rental affordability out of all the cities.

Pensioners, single people on benefits, single mothers and men living alone were hit particularly hard, the report found. In Sydney, a single pensioner living on an average annual income of $27,329 would spend 90% of his or her income on rent for a one-bedroom dwelling.

Pensioners would have to move to regional South Australia to find accommodation that would not force them into rental stress, the report said. A pensioner couple with a combined annual income of $50,372 would also have to move to regional SA, Tasmania or Victoria to find an affordable rental property.

A single person living on the $17,836 annual income of a Newstart allowance would have to pay 128% of their weekly income to live in Sydney. Even in regional SA, Tasmania and Victoria, the most affordable places to rent in the country, almost half the weekly income would go on rent.

The biannual study is published by National Shelter, Community Sector Banking, the Brotherhood of St Laurence and SGS Economics and Planning.