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House rents have seen the strongest annual growth in 13 years, a new analysis has revealed.
According to Domain’s Quarterly Rent Report, house rents have hit a record median high of $508 across Australia’s capital cities.
That rise in rent prices came thanks to a broad-based surge in house rental prices across Melbourne, Brisbane, Adelaide, Darwin, and Perth – with Sydney the only city to not see gains over the March quarter.
It’s led to record-high asking prices also being reached in Adelaide ($465) and Brisbane ($500).
Canberra is leading the pack for the most expensive capital city rental market across Australia. Over the March 2022 quarter, the city posted an average asking rent price for houses of $700, which Domain has noted as being “well above the national median”.
That’s $25 per week more than it was in the December 2021 quarter – leading to quarterly growth of 3.7 per cent and compounding year-on-year growth to 16.7 per cent.
At the other end of the spectrum, Melbourne remains the most affordable capital city to rent houses, having recorded annual growth of just 3.4 per cent.
Up in Sydney, despite the city recording its steepest annual increase in 13 years, of 9.1 per cent, house prices haven’t moved over the March quarter, maintaining their $600 high.
Domain has noted that the rising prices are putting additional pressure on Australian renters, and it’s already having ramifications on the market.
With houses increasingly out of reach, the pace of quarterly growth in the unit sector doubled from the December quarter to the March quarter, with unit rents now sitting at $448.
This is just below the 2018 peak of $464 per week.
In fact, Domain has revealed that unit rents grew faster than houses over the March quarter, as the rate of house rent growth halved in the same time frame that unit rent growth doubled.
Adelaide saw the greatest rate of growth for unit asking prices over the quarter – which is up by 5.6 per cent on December 2021 prices, to reach $380. This has been attributed to the rental crisis currently facing the city of churches, where overall vacant rental advertisements are down 69 per cent from a year prior.
It’s a similar situation in Hobart, where unit prices are up by 4.7 per cent over the quarter, to $450 per week.
This strain looks likely to stick around, with Domain forecasting that short-term rentals will be in further demand as tourism resumes across both cities, with the effect of extra tension within the unit rental market.
Zooming out across a 12-month period, it’s Darwin that’s recorded the largest gains, of 16.3 per cent from the average $430 per week asking price reported 12 months ago.
Sydney ($500 per week), Melbourne ($390 per week), Perth ($400 per week), Darwin ($500), and Brisbane ($430) all recorded unit price gains over the quarter.
Domain chief of economics and research Dr Nicola Powell notes the tension for renters is continuing – both across house and unit markets.
“When combined with Domain’s recent vacancy rates revealing that national rates decreased to their lowest on record in March, renters are finding themselves in a heated market with shrinking supply,” she noted.
With no signs of the current “cluttered market” ending, Dr Powell said many renters would now be considering whether unit rental options can provide them with a more affordable alternative to houses, or looking to cities or suburbs where rental asking prices are showing to be more affordable or have higher vacancy rates as a way to land a rental property.
On the other side of the equation, she expects continuing pressure within the rental market to attract investors to places such as Perth, Darwin and Canberra, citing the potential for higher rental yields.
Dr Powell shared that “on the current state of the rental market there are opportunities, it is worthwhile considering whether you are buying in metro or regional Australia, and the subsequent property type that maximises opportunities for return”.
“For instance, the unit gross rental yields for combined capital cities increased by 2.3 per cent over the past quarter, however, decreased by 1.4 per cent for houses,” she said.
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