Lease and housing rentals in Australia's capital cities are likely to increase annually between 3 to 7 percent in the next two to three years, reports said.

Rental costs in Sydney, Perth, and Brisbane, Hobart, Adelaide, and Melbourne are deemed for another round of increases, as new constructions of homes have been insufficient with the growing demand, a report in the Sydney Morning Herald quoting economic forecaster BIS Shrapnel.

Australians should brace for a rent adjustment of between 5 to 7 percent living in Sydney, Perth and Brisbane. While residents renting in the cities of Melbourne, Hobart, and Adelaide are warned of between a 3 to 5 percent increase in the next 24 to 36 months.

said new dwelling construction had not been adequate over the past 12 months.

"We expect rental growth to pick up again," BIS Shrapnel analyst Angie Zigomanis said in the SMH report, adding that the last 12 months has also shown indicative monthly rental increases. "But we expect that to get closer to the mid single digits over the next few years."

The robust growth of the economy and the job vacancies to be filled up in Australian cities had tightened demand for houses and apartments for rent.

It did not help that building approvals had been on a decline in the last 15 months, data from the Australian Bureau of Statistics indicated.

Loans acquired for home building also grew minimally during the period, the statistics bureau said.