- Total rental listings fell 8.8% in the past 12 months across the capital cities.
- The national vacancy rate is now up to 1.5% from 1.3%.
- Surging immigration and low supply are causing problems for rental markets.
There’s no relief just yet for struggling renters in capital cities, but the news is better for regional areas, where the supply of rentals is on the rise.
The PropTrack Rental Report June 2023, found that total rental listings across the major capital cities are down 8.8% year-on-year (YoY) in June 2023, and 23% lower than the five-year average for June.
However, after experiencing an influx of people during COVID, rental markets in regional Australia are starting to ease, with, total rental listings up 20.5% compared to a year ago.
PropTrack director of economic research, Cameron Kusher, said the national rental market remains extremely tight.
“Rental vacancies and days on site have drifted marginally higher but both remain low on a historic basis,” said Kusher.
“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.”
Annual change in rent
Double-digit rent increases
Rents across the country have now risen to $520 per week, an increase of 2% over the quarter and 11.8% compared to June 2022.
Regional Northern Territory (-6.1%) was the only rental market, nationally, in which rents didn’t rise over the past year, while rents fell in regional Queensland (-1%) and regional NT (-4.2%) over the past quarter.
Darwin (3.6%) and regional Victoria (5%) saw the smallest increases in rents over the year, while Perth (15.6%), Brisbane (14.9%) and Sydney (13.8%) saw the largest increases.
The national rental vacancy rate has risen slightly from its recent low of 1.3% in March 2023, however, it remains very low at 1.5% in June 2023, down 1.6% from a year earlier.
Across the capital cities, the number of enquiries per listing on realestate.com.au was unchanged over the year, while regionally, the number of enquiries per listing collapsed by 35.3% year-on-year; properties were advertised for 21 days, slightly longer than the 20 days in June 2022.
Stock on market for rent
A growing population
Kushner said that the rental market continues to face a number of headwinds.
“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.”
Cameron Kusher, PropTrack director of economic research
He said that the push toward regional living has also reversed course for the time being.
“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.”
Supply and demand imbalance
Kusher said that the ongoing lack of supply is keeping upward pressure on rents in the 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 stefady.”
“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.”
“Looking to shift demand, however, is somewhat more difficult or less likely to occur.”
“This would include slowing migration or finding ways to get more first-home buyers purchasing sooner and therefore vacating current rental properties.”
Adding to the problem, Kusher said that large rental price increases over the past year, and a high interest rate environment means that, for most people, it is generally cheaper to rent than it is to service a mortgage.
“Given this, transitioning out of renting into a home is likely to be a challenge.”
“However, as rents are expected to continue to rise, people may be willing to take on the additional cost of home ownership, in order to obtain secure tenancy.”