- Despite rises, Melbourne remains the most affordable place to rent.
- An affordability ceiling may have been reached in Adelaide.
- Canberra remains Australia’s most expensive city in which to rent a house.
The rental crisis across the country has seen rents surge by nearly 20% but there could be relief in sight for tenants as growth rates are starting to ease.
According to the Domain Rent Report for December, the country has seen the steepest annual rental increase on record, with a 14.6% increase for houses and 17.6% for units across the major capital cities.
Sydney
In Sydney, house rents jumped by 12.1%, while units increased by 18.6%. Unit rents reached a new high at $575 per week and for the first time since September 2020, is once again the most expensive city to rent a unit.
Sydney’s steepest growth in house rents since 2008 came to an abrupt halt over the December quarter, holding at a record high of $650 per week. This has slowed the pace of annual growth for the first time in 18 months but remains high relative to previous years.
Asking rents, Sydney
Melbourne
In Melbourne, unit rents surged by a record 20% over the course of the year, while houses also increased by 7.9%. The surge in rents is the longest stretch of rental price growth in fifteen years (since 2007-2008) for houses while units experienced the fifth consecutive quarter of rising rents.
House rents hit another record high although Melbourne still remains the most affordable city in which to rent a house. For the first time since March 2020, unit rents are at a new record high at $450 per week following the steepest quarterly and annual growth ever to be seen for the city.
Asking rents, Melbourne
Brisbane
In Brisbane, rents jumped 14.6% for houses and 14.3% for units as the state continues to be a hotspot for interstate migration. However, Brisbane’s second-longest stretch of rising house rents came to a stop in the December quarter, holding steady at an all-time high of $550 per week. Unit rents continued the record-long stretch of rising rents following the sixth consecutive quarter of growth.
Asking rents, Brisbane
Adelaide
House rents in Adelaide are at a new record high after increasing 11.1%, but growth is slowing. This suggests an affordability ceiling is being reached as tenant budgets are unable to keep pace with house rents. Unit rents are steady at the record high achieved in the previous quarter at $400 per week after increasing 14.3% over the course of the year.
Asking rents, Adelaide
Perth
Perth’s house rents have risen sharply for the fifth successive quarter and have accelerated to provide the strongest quarterly outcome in two years. House rents have grown by 15.2% in the past 12 months. Unit rents have also increased over the quarter but the pace of growth has halved compared to the previous quarter. Unit rents grew by 10.3% over the past year.
Asking rents, Perth
Canberra
House rents have rebounded in Canberra after reversing all of the previous quarters’ declines to finish the year 3% higher. Canberra remains Australia’s most expensive city in which to rent a house. However, rental growth continues to slow with the annual pace at its lowest in two years.
Asking rents, Canberra
Hobart
The stability in Hobart’s rental market last quarter was short-lived, with house and unit rents rising over the December quarter to reach new record highs. Hobart is still in the midst of a rental crisis and is firmly in a landlords’ market with rents increasing by 10% for houses and 9.4% for units in the past year.
Asking rents, Hobart
Darwin
Meanwhile, Darwin’s asking rents grew over the December quarter to reach the highest point since 2015 for houses and late 2014 for units. It is the only capital city to not reach record high house and unit rents in the last year, however, house rents increased by 5.1% with units 8.3% higher.
Asking rents, Darwin
Signs of slowing ahead
In some good news for tenants, despite the record surge in rents, there are some signs that rental growth is now starting to slow down.
According to CoreLogic, house rents in more than one in six suburbs nationwide have dropped in the past three months.
Canberra is the weakest rental market with more than 70% of suburbs seeing a drop in median rent, followed by Darwin and Hobart with rents falling in 58.1 per cent and 38.1 per cent of all suburbs respectively.
In Sydney, house rents across 18.3 per cent of markets have fallen, led by Bundeena in Sydney’s south, with a 7.9 per cent decline.
CoreLogic head of research, Eliza Owen, said the weakness in some rental markets could spread.
“I think we’re starting to see a shift in favour of tenants across some suburbs in the smaller capital cities,” Ms Owen told the AFR.
“I think that could be because people are more comfortable to move around post-lockdowns so that could be encouraging migration to more affordable markets.
“This is already happening in Canberra, which is the only market where rents have fallen off after a fairly strong uplift in rental values.
“This is in line with migration trends as well, as more people are leaving Canberra for other parts of the country than arriving.”
