- Rent prices are expected to increase across the country in 2024.
- High migration and consistent interest rate rises have exerted upward pressure on rental prices.
- Supply and demand fundamentals are unlikely to correct soon.
Australian renters have been struggling with the exorbitant cost of rent, climbing higher throughout the year.
This trend is expected to continue unabated well into 2024, according to CBRE head of residential and BTR research, Craig Godber.
“The 13 rate increases since May 2022 have pushed mortgage rates to their highest levels since 2011,” he said.
“This is expected to bite more in 2024 as household budgets are stretched.”
Looking back at Australia’s 2023 rental market
In March, analysis from SQM Research found that from 2022 to the beginning of 2023, asking rents had risen between 28% and almost 50% for Sydney, 18% and 37% for Brisbane, and between 11% and 36% in Melbourne.
In a year also marked by huge levels of overseas migration and fairly consistent interest rate rises, the metrics of the rental market reconfigured to reflect the difficult conditions.
According to the Australian Bureau of Statistics (ABS), Australia’s population grew by 2.2% in the 12 months to March 31 this year.
ABS head of demography, Beidar Cho, said: “13 months after international borders were re-opened, net overseas migration accounted for 81% of growth and added 454,400 people to the population in the year to March 2023.”
CoreLogic head of research, Eliza Owen, said: “Since the re-opening of international borders, strong rent growth was exhibited in markets with historically high exposure to overseas migration.”
CBRE’s Residential Figures Q4 Report also estimates the expected 1.135 million overseas migration figures to the three years to 2025, combined with natural population growth, will translate into a need for over 600,000 new homes in Australia.
Concurrent with these figures were construction difficulties, such as supply chain delays, increasing cost of materials and shortages due to a lack of labour.
Unsurprisingly, this resulted in low vacancy rates across the country, with rental stock dwindling due to diminished investor activity. Perth, which has consistently had among the lowest vacancy rates in the country through the year, saw listings hit a 30-year low in September.
According to SQM, residential vacancy rates have shown no improvement throughout the year.
Residential vacancy rates – national
However, weekly rents across all houses nationwide have shown a year-on-year price increase of 17.0%.
Asking rents – national
The Property Tribune reached out to a variety of experts for their takes on what the property market might look in 2024 for Melbourne, Sydney, Perth, the Gold Coast, and Adelaide and the recurring theme was clear: it is not going to get any easier for renters.
Supply and demand unlikely to see equilibrium
The fundamental driver of rent increases is due to the imbalance of supply and demand.
Building more dwellings across the country seems the most immediate and obvious solution, however, PropTrack director of economic research, Cameron Kusher, pointed out that dwelling approvals and commencements are at decade lows and this is unlikely to change much in the near-term.
“In the meantime, solutions should encourage better utilisation of current properties and investment in the housing market, or support first-time buyers into homeownership, freeing up the rental stock they currently occupy,” he said.
“It appears unlikely that there will be any imminent relief from the tough rental market conditions in the major capital cities.
“We expect supply to remain tight and demand to stay persistently strong, which is likely to push rents higher.”
Godber agreed and added, “With supply pipelines remaining constrained, there is unlikely to be any significant correction in the supply/demand imbalance for some years.”
