2021 may have been the year that sent property prices soaring, but will record-level rises be felt in another real estate sector this year?
According to one economist, Australian renters may be looking at substantial increases in the months ahead.
“Australia ended 2021 with house prices up 21 per cent compared to the start of the year. While at this stage, it is looking like house price growth will continue, albeit at a slower pace, rental levels are set to accelerate,” said Nerida Conisbee, Ray White’s chief economist.
That’s not to say that the previous year had seen no growth in the sector.
“Rental increases were far more subdued than price growth in 2021, increasing on average by 6.7 per cent. [It was a] great result for landlords, particularly given the more challenging conditions in 2020, but obviously far tougher for tenants,” Ms Conisbee noted.
She observed that the areas that have recently experienced the highest levels of rental growth are linked to mining, particularly regional Western Australia, Perth and Darwin.
Outside of that, the areas that saw the biggest rental increases in 2021 generally fit into four categories:
- By the water in desirable seaside holiday destinations (e.g., Byron Bay, Coolum Beach, Peregian Beach)
- In a mining town (e.g., South Hedland and Port Hedland)
- Premium Sydney (e.g., Vaucluse and Newport)
- Mid-priced Perth (e.g., Como and Beaconsfield)
The country’s CBD markets, meanwhile, varied based largely on which cities experienced the longest COVID-related lockdowns. Perth and Brisbane both had decent increases in rents over the past 12 months, while Melbourne and Sydney CBDs saw declines.
Will these trends continue across 2022? With borders open to a greater level of international travel, Ms Conisbee expects that international migration will increase competition in the rental market.
“This year will be challenging for renters but good news for investors. It will however also kickstart a new construction cycle – expect to see more apartments to buy and rent in 2023,” she said.
ABOUT THE AUTHOR
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.