- Rents nationally have risen by more than 10% over the past year
- Prices in the capital cities continue to ascend, regional markets slumping
- Rental price declines mostly concentrated in Canberra and regional areas
The Australian rental market is expected to become a bigger burden on pockets around the nation as CoreLogic’s June 2023 Rental Insight report found over 40% of house and unit markets posted rent hikes of over 10%.
Rents continue their ascent
While the rental growth has been slowing recently, over 1,700 Australian house and unit suburbs registered rental increases of at least 10% over the past year. There have been signs that the market has eased slightly, with the rise in May at 0.8%, a 0.1 percentage point drop from the 0.9% increase and 0.1% in April and March.
Rolling annual change in rents (all dwellings)
CoreLogic Economist Kaytlin Ezzy believes that the softening monthly growth rate caused a fall in the annual trend, with a rolling yearly change in rents of 9.9%, the first time it’s dipped under double digits in 10 months. The fall was primarily attributable to lagging regional markets, where rents have sunk from a record monthly increase of 1.2% in March 2022 to a paltry 0.3% increase.
Trailing regional markets, over-pressured unit sector
“Regional rental growth has slowed dramatically from a year ago while capital city rents were up 1.0% in May. When you break that figure down further by property type, we can see the unit sector is under the greatest pressure, with rents increasing at a faster rate than houses due to their relative affordability,” says Ezzy.
House rents in the capital city rose by 0.9% in May, while units clocked in a 1.4% increase. With the present difference between housing and unit rents less than $40 a week, the cost of unit rents may soon encroach into housing rent territory.
Indeed, another recent CoreLogic report found that the unit rents will soon creep into housing rent territory, as the difference between housing and unit rents is now less than $40 a week.
Rolling quarterly change in rental dwelling values – Capitals cities
6.7% of the 3812 markets recorded a rent decline —225 houses and 29-unit suburbs, most in Canberra and regional areas.
Thirty-eight markets in Sydney saw rents recede as well, mainly from the Central Coast. On the other hand, only four markets in Melbourne had a yearly rent drop, while the northeast suburb of Ascot was the singular market in Brisbane where rents fell.
“In the past year we’ve seen rents increase in every capital and rest of state region except for Canberra where there’s been a – 1.9% decline,” Ezzy says.
“Canberra was previously the country’s most expensive rental city until Sydney overtook it in December. The softening rental conditions in the ACT is likely due to there being more stock on the market. Canberra’s vacancy rate has increased from 0.7% in March 2022 to 2.2%, putting it second behind Hobart (2.7%). More stock means tenants have more choice and potentially more power when negotiating their rent.”
