Rental stress is characterised by households spending more than 30 per cent of their income on rent.
While almost 3 million households are renting, population growth means the proportion of renters is shrinking.
Renters now make up 30.6 per cent of households compared to 30.9 per cent in 2016.
Fewer Aussies living in public housing
The number of people living in public housing has dropped substantially, by 25,000.
Analysis by tenant-advocacy organisation Better Renting noted the increase of people in community housing partially explained this drop.
Community housing is delivered by community housing organisations, whereas public housing is delivered by government departments.
Demand for community housing and public housing continues to outstrip supply, according to a , with the number of people on waiting lists for public housing growing by 8,900 since 2014, from 154,600 to 163,500.
Joel Dignam, executive director of Better Renting, said the figures showed more support was needed for renters.
Dignam said millions of people in Australia were now living in rental accommodation long term.
“They are renting as they mark life milestones, raise children, and transition into retirement,” he said.
"But it’s hard to make a home in this situation when you can face eviction at the drop of a hat, and when there are few protections against eye-watering rent increases.”
He said, with more people renting long-term and bringing up children in the rental sector, state governments needed to prioritise rental reform.
He was also concerned to see the drop-off in public housing.
“At a time when the for-profit housing market is failing our community, there is more need than ever for government to take responsibility to provide affordable homes for people on low incomes,” Dignam said.
“Yet these figures show that governments aren’t even providing enough public housing to keep up with population growth, let alone an increase in public housing to meet the urgent need for people who are currently couchsurfing, sleeping in their cars, or skipping meals to pay the rent.”