Ballarat's rental vacancy rate is on the rise after hitting a record low of 0.7 per cent in November, the lowest rate in the state.
Real Estate Institute of Victoria data shows the rental vacancy rate for Ballarat and the Central Highlands was 1.1 per cent in May, 0.1 per cent below the regional Victoria total of 1.2 per cent.
While the Ballarat's rental vacancy rate has risen 0.4 per cent in four months, Ballarat Real Estate director Allister Morrison said any rate less than two per cent remained remarkably low.
"Competition for residential rental properties is very fierce at the moment," he said.
"We have around nine people on average through an open house and around three or four applications per property.
"That is a pretty competitive situation where two or three households are missing out each time."
A lower rental vacancy rate indicates landlords may have the upper hand in a bargaining position, while a high or rising vacancy rate generally means tenants are in a more favourable position.
Competition for residential rental properties is very fierce at the moment.Allister Morrison, Ballarat Real Estate
Mr Morrison said the marginal increase in Ballarat's rental vacancy rate could be attributed to seasonal factors.
He said less people moved house during the winter period and the rental market would not be impacted by student moves for university that happen more at the start and end of the year.
"The middle of the year can be a settled time for the rental market," Mr Morrison said.
"But if this rate continues there will be upward pressure on rental prices."
REIV chief executive Gil King said a vacancy rate of three per cent was required for a healthy rental market, where there is enough supply to meet demand.
"While Ballarat's rental vacancy rate is at its highest level since July 2018, it is still among the lowest in regional Victoria," he said.
"The rise could be attributed to a range of factors, including a rise in investor confidence following the Federal Election, the Reserve Bank of Australia's decision to lower the cash rate and APRA signalling that it will review its guidance resulting in a possible loosening of mortgage-lending standards."
Buxton Ballarat co-director Mark Nunn said more sales in Ballarat were made to investors over the past two to three years which was increasing the supply of rental properties on the market.
"It means people looking to rent will have a few more options of houses to lease which is a good thing from a tenants point of view," he said.
"From investors point of view it is certainly nothing to worry about as vacancy rates are still very low."
The Victorian total rental vacancy rate was 2 per cent in May, according to REIV.