This article is from the Australian Property Journal archive
RENT values have surged across more than 90% of Australia’s markets in the last year, with the majority of unit markets recording increases of 10% or more.
According to the latest analysis of CoreLogic’s Mapping the Market, more than nine in 10 house and unit markets saw rent hikes over the 2022-23 financial year, with almost two-thirds of unit markets and one-third of house markets up by 10% or more.
“Investors tend to shy away from the housing market during negative economic shocks,” said Kaytlin Ezzy, economist at CoreLogic.
“The sharp rise in interest rates has coincided with a -23.6% fall in new housing investment lending between April 2022 and May this year, and this includes a slight recovery in investment lending in recent months, which has lifted 10.0% from a low in February this year.”
Adelaide, Perth and Regional Western Australia saw the most widespread increase in rent values, with 100% of suburbs reporting a year-on-year increase for both house and unit markets.
“On the demand side, record levels of overseas migrants, many of whom rent in inner-city unit precincts, has bolstered rental demand this year, causing an imbalance between rental demand and supply,” added Ezzy.
“For Perth in particular, there is a persistent shortage of rentals, with total rent listings now about – 50% lower than the historic five-year average.”
In Perth, rent increases have seen another pick-up in momentum since early 2022, with values now 13.4% over the year and 41.8% higher than at the onset of the pandemic in March 2020.
Brisbane, Darwin and Regional Queensland also saw 100% of suburbs increasing in their unit markets.
While Sydney saw unit rents fell in three suburbs, down 3.7% Long Jetty, 2.5% in Wyong and 0.03% in The Entrance.
Similarly, Melbourne’s unit rents fell in two suburbs including a drop of 2.3% in Rosebud West and 0.5% in Hastings. While just one unit market fell in Hobart, with rents down 0.2% in Claremont.
Canberra on the other hand, saw 18 unit markets record a decline in rent value over the financial year.
“Despite a few minor declines in the city’s Central Coast region, Sydney units continue to record some of the strongest rental growth across the country,” said Ezzy.
“Units in Sydney’s Inner-city market of Haymarket recorded the highest annual rise, up 32.6% or $276 per week, followed by Georges Hall (31.3%) and Arncliffe (30.9%) in the city’s Inner South West.”
The house market was far more diverse over the financial year, with 147 of the 1,686 suburbs analysed recording a decline.
“While annual rental increases remain fairly geographically widespread, it’s likely we’ll see the pace of rental growth continue to moderate over the coming months, as cumulative rental growth pushes more renters towards their affordability ceiling,” added Ezzy.
Meanwhile the latest PropTrack Rental Report June 2023 shows the national rental vacancy rate was at 1.5% in June 2023, down 1.6% from the from the same time last year.
Nationally, new rental listings were historically low, sitting 5.7% down on the June average for the past five years.
With total rental listings in the combined capital cities down 8.8% year-on-year in June and 23% lower than the June average for the past five years.
“The national rental market remains extremely tight. Rental vacancies and days on site have drifted marginally higher but both remain low on an historic basis,” said Cameron Kusher, report author and director of economic research at PropTrack.
“At the same time, the volume of stock available for rent remains low and demand for rentals is broadly strong. As a result of these conditions, the cost of renting continues to rise.”
At the close of the quarter, the median advertised rental price was at $520 per week, up 2% over the quarter and 11.8% compared to June 2022.
Across the combined capital cities, the number of enquiries per listing on realestate.com.au was unchanged over the year.
Additionally, in June, the median number of days a property was advertised for rent on realestate.com.au sat at 21 days, a day longer than the 20 days in June 2022.
While nationally the gross rental yield was at 4.1%, up from 3.9% at the same time last year and combined capital city gross rental yields were up from 3.7% to 4% over the year.
“Adding to the challenging rental market is the rapid rebound in the number of people arriving in Australia. 2022 saw the largest increase in population on record, driving more demand for rentals. Most people arriving in the country, at least initially, will require rental housing, creating more competition for available properties,” added Kusher.
“Smaller capital cities and regional markets are experiencing subdued rental demand. Fewer people are leaving the capitals, while some return post-pandemic, and strong net overseas migration sees most migrants settling in our major cities.
Regionally, total rental listings were up 20.5% higher than a year ago, as Australia’s smaller cities and regional markets experience reduced rental demand.
Regionally, the number of enquiries per listing dipped a significant 35.3% year-on-year. With rental yields in Australia’s regions were down from 4.7% to 4.5% year-on-year.
“The lack of new supply remains the biggest strain on the rental market, particularly in the larger capital cities. Low levels of investor and first-home buyer purchasing activity has resulted in little growth in rental stock, while demand for rentals holds steady,” said Kusher.
“In the immediate term, attracting more investors into the market or utilising empty or short-term rental properties for longer-term rentals is the quickest way to address the rental deficiency.”
