- Enquiries have started to drop
- Supply remains at historic lows
Life continues to be tough for renters in the capital cities, with a new report showing strong demand and a lack of rental stock is still driving up prices.
However, conditions might be starting to improve as the number of enquiries per listing has started to decline.
The PropTrack Rental Report March 2023, found that in the combined capital cities, total rental listings were sitting at historic lows in March 2023 after falling 18.3% year-on-year.
While across regional Australia, total rental listings were up 22.5% in the past 12 months, to sit at their highest level since July 2020 – the largest annual increase since December 2010.
PropTrack Director of Economic Research and report author, Cameron Kusher, said the national rental market was extremely tight over the first quarter of 2023.
“Rental vacancy rates were edging lower due to exceptionally strong demand for rental properties and an ongoing shortage of supply,” said Kusher.
“As a result of these conditions, properties were leasing quickly, and landlords were afforded scope to increase rents.”
Rental vacancy rate comparison: March 2022 and 2023
Enquiries starting to ease
After a surge in immigration and the return of international students, demand had been as high as we’ve seen in many years. However, in some good news for renters, the number of enquiries per property is now starting to slow down.
According to the report, the number of enquiries per listing on realestate.com.au was up 8.3% year-on-year across the capital cities, however, regionally, it was down a significant 41.7%.
Nationally, the number of enquiries per listing was down 4.2% year-on-year in March suggesting that demand is slowly starting to come down.
Nationally, new rental listings were slightly higher than last year, up 2.2% in March – the first increase since December 2020, though new listings remain historically low.
The report said, with limited new stock, the total supply of properties for rent has tightened.
The national rental vacancy rate was at 1.5% in March 2023, down from 1.6% the quarter prior, which has seen rents rise 11.1% nationally in the past 12 months, to sit at $500 per week.
The largest quarterly increases in advertised rents were recorded in Perth (8.7%), regional WA (6.7%) and regional NT (6.7%), with every capital city and regional area recording an increase in advertised rents over the year to March 2023.
The largest increases were in Brisbane (15.6%), regional WA (14.3%) and Adelaide (13.3%), with regional NT (4.3%), Canberra (4.3%) and regional Queensland (6.4%) seeing the smallest increases.
Average enquiry per listing comparison: March 2022 and 2023
Immigration putting huge pressure on renters
Kusher said the rapid rebound in migration to Australia is increasing competition for rental properties and putting tenants under extreme pressure.
“Most of the people arriving in Australia don’t own a property in the country and will be seeking somewhere to rent, adding to rental supply shortages.”
“These rental pressures are being felt acutely in Sydney, Melbourne and Perth, while regional markets are seeing demand soften as pandemic-induced trends subside.”
“Fewer people are leaving capital cities for regional areas, some are returning to the capital cities and those who are staying regionally are likely now purchasing.
“These trends are expected to continue, leading to a further easing of regional rental pressures.”
Kusher said the challenges for renters are being exacerbated by the fact that higher interest rates have reduced borrowing capacities.
“This is making it harder for renters to transition into first home buyers and more difficult for investors to purchase properties, restricting rental supply.”
Cameron Kusher, PropTrack Director of Economic Research
According to Kusher, the lack of new rental supply, particularly in the larger capital cities, continues to put a strain on the market.
“Investors continue to exit the market and few new investors are entering.”
“Although there is a lot of housing supply under construction, most has been targeted toward the owner-occupier market rather than investors.
“Absent a return of investors to the market or a big increase in first home buyer numbers, it seems unlikely that the strong demand and insufficient rental supply will be rectified any time soon.
“This means the cost of renting is expected to continue rising – particularly in capital cities.”
Annual change in median weekly advertised rents: March 2023
