More than half (55%) of people aged under 35 said they had been discriminated against when looking for a rental property, according to new research.
More than a fifth of those (22%) said they had been discriminated against on the basis of their age.
People with pets, on low incomes, or who received government payments, also reported higher rates of discrimination when trying to rent a home, the report from consumer lobby group Choice found.
Even though young Australians are likely to be on lower incomes, 40% of them still pay more than $300 a week in rent, the data showed.
Over the past five years property prices have increased by 23% across the country, and by almost 55% in Sydney.
The majority of renters - 37% of whom are under the age of 35 - believe rental properties are becoming more unaffordable and poorer in quality.
But many people were too scared to complain to their landlords, the report found.
In such a competitive market, half of renters surveyed felt afraid to ask for repairs or complain about their housing over fears they could be evicted, face a rent increase or be blacklisted by real estate agents.
Last month, more than 200 Sydneysiders reportedly queued to inspect a rental property in the city's inner west.
"Younger Australians, in particular, are being locked in the rental market," the report said.
As property prices skyrocket and put home ownership out of reach for many Australians, more people are renting than ever before, and for longer – 43% have rented for more than a decade.
One in five renters under the age of 35 have already been renting for more than 10 years.