The latest rate rise will increase pressure on an already cramped rental market, says the Real Estate Institute of Victoria (REIV). Pointing to a second consecutive month of record low vacancy rates, REIV chief executive Enzo Raimondo said the last interest rate rise posed another reason for renters to put off buying a home. The institute's vacancy figures for June, released Wednesday, show Melbourne's rental vacancies remained at their lowest levels since March 1998. Just 1.7 per cent of rental properties were unoccupied citywide over the month, with 2.4 per cent vacant in regional Victoria, and this was before the Reserve Bank's decision to lift official interest rates. "With a second rate rise this year, I would expect the market to get even tighter as buyers of more affordable properties may defer property purchases and remain in rental accommodation," Mr Raimondo said. "(And) while the low rate is not good news for renters I expect investors should receive better returns." Mr Raimondo said a downturn in the building of new rental accommodation - high rise apartments and homes - would also create a "further tightening of the market" and ensure the low vacancy rates continued into the future. "Within four kilometres of the CBD there also appears be a reduction in supply ... there is very little new supply coming onto the market in places like Docklands, Richmond or Carlton," Mr Raimondo said. On the flip side, suburbs between four and 10 kilometres from Melbourne's CBD - such as Brunswick, Northcote, Newport, Essendon, Elwood and Elsternwick - charted a "small increase" to a two per cent vacancy rate over June. And rental availability was better outside Melbourne, Mr Raimondo said, except in Geelong where the vacancy rate dropped from 2.4 per cent to 1.4 per cent in one month. "It's almost as hard to find rental accommodation in Geelong as it is in the inner city of Melbourne." SOURCE: AAP