The cost of renting in Sydney has improved but many tenants still struggle to make ends meet, new analysis shows.

A biannual report on rental stress reveals a marginal improvement in affordability, but the gains have made little difference for low-income households.

The average rental household in Greater Sydney put 27 per cent of their income towards rent in the June quarter, the latest Rental Affordability Index, by National Shelter, Community Sector Banking, SGS Economics & Planning and the Brotherhood of St Laurence, released on Thursday shows.

Many put 30 per cent or more of their income — the benchmark for rental stress — towards their home, with single-income households hardest hit.

“We are particularly worried about single parents with children,” said SGS Economics and Planning partner Ellen Witte.

“There are 110,000 single-parent, low-income households out there living in rental stress and 82 per cent of those households are single mothers. The majority earn $41,600 per annum or less. In Sydney they would be paying about 70 per cent of their income on rent, which is clearly unsustainable.”

Single men typically put about 68 per cent of their income towards rent and a single pensioner 90 per cent, while a single person on benefits would need 128 per cent. Even if working full-time, a single parent would be in rental stress.

“Something’s got to give,” said National Shelter executive officer Adrian Pisarski.

“These people either have to do without all sorts of things or they are forced into marginal forms of housing – caravan parks, boarding houses, to the city fringe or overcrowded share properties, none of which is good for health and wellbeing.”

Sydney remains the second-least affordable city in Australia, after Hobart, where rents have skyrocketed in recent years.

Only two suburbs within 15 kilometres of the CBD, Redfern and Ultimo, offer acceptably-priced rents but even these are on the verge of becoming unaffordable.

The index shows the average household must travel at least 15 to 40 kilometres west from the city to find acceptable rents. Moving north and south will offer little relief, with unaffordable rents now reaching as far as Terrigal and out to Wollongong and Gerringong.

Shelter NSW chief executive Karen Walsh said renters often had to settle for sub-standard housing to find something they could afford and rely on rental laws that provided little security.

She said both sides of politics needed to commit to address the crisis, and should start by building at least 5000 additional social housing dwellings each year for the next 10 years.

Ms Witte said there was a strong economic argument for boosting the supply of affordable and social housing: the further people had to travel to afford a home, the more their job prospects, productivity and health suffered.