Median rents have surged by more than $100 per week across 35 house markets and 23 unit markets nationwide over the past 12 months to August as residential rental supply tightens, data from CoreLogic shows.
Rose Bay in Sydney’s eastern suburbs had the highest weekly rental gain of $378, or 22.3 per cent, over the year, followed by Roseville Chase, Lindfield and Roseville on Sydney’s upper north shore with $241, $221 and $211 increases respectively.
House rents in Rose Bay in Sydney’s eastern suburb soared by $378 a week in the past 12 months according to CoreLogic.
The vacancy rate nationwide has plunged to 0.9 per cent, its lowest level in 16 years. But there are signs that the rapid pace of rent growth is easing as affordability takes its toll on tenants.
Rental value increases for houses nationwide eased from 2.8 per cent in the three months to May to 2.2 per cent over the three months ended August, while median unit rent growth eased by 0.1 percentage point to 3.6 per cent over the same period.
Some of the smaller capitals and regional markets, which recorded stronger rental growth over the pandemic period, have now posted a decline in rental growth.
House rents in Canberra fell by 0.4 per cent and were down by 0.2 per cent in Hobart. In regional Tasmania, rents dropped by 0.6 per cent. They slipped by 0.7 per cent in regional NT, and weakened by 0.3 per cent in regional SA and by 0.4 per cent in regional Tasmania.
“Rental affordability is likely to be the main factor impacting rental demand, with many renters searching for more affordable rental alternatives as rents continue to rise,” CoreLogic economist Kaytlin Ezzy said.
“After house rents surged through 2021, rental demand shifted towards the medium- to high-density sector as a more affordable alternative.”
Rental gains were widespread over the year to August. House rents on the Gold Coast suburbs Maudsland and Jacobs Well rose strongly, jumping by $168 and $154 a week respectively. In Adelaide, Glenelg South climbed by $150 a week and Glenelg East by $140.
In the unit market, Docklands in inner Melbourne notched the biggest rental rise of $161 a week or 35.1 per cent in the past 12 months. Southbank rents lifted by $150 or 33.9 per cent and West Melbourne by $146 or 36.4 per cent.
Nationally, unit rents surged by 11.3 per cent over the past 12 months, their strongest annual growth rate on record.
Median unit rents across Sydney, Melbourne, Brisbane and Adelaide also hit their highest levels on record, jumping by 11.6 per cent, 12.9 per cent, 10.7 per cent and 12.2 per cent respectively over the year.
Brisbane and Adelaide also posted record-breaking annual growth rates for house rents, which soared by 14.1 per cent and 12.2 per cent respectively.
The short-term outlook for the rental market is unclear as different forces will influence the size – and number – of new households needing to be housed.
“Now that national unit rents are recording the strongest annual growth on record, it’s likely a number of renters are looking to form larger households, reversing the trend seen over the COVID period, in an attempt to share higher rental cost across a larger tenancy base,” Ms Ezzy said.
“At the same time, we’ve also seen the number of overseas migrants bounce back in recent months, particularly across Sydney and Melbourne, which has potentially offset the reduced demand caused by the currently anecdotal trend towards larger rental households.”
Quarterly growth across Sydney and Melbourne, which typically receive the majority of overseas migrants, held steady at a cyclical peak of 4.1 per cent and 3.9 per cent respectively, while Brisbane recorded a new cyclical peak of 4.6 per cent in August.
“Given that vacancy rates are at near-record lows and rental demand remains strong across most capitals, it’s likely rents will continue to rise for some time yet,” Ms Ezzy said. “How high rents rise will be limited only by what prospective tenants are willing or able to pay, with rental affordability becoming a larger factor impacting rental demand.”
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