July saw rents trend higher nationwide, according to the latest CoreLogic Home Value Index (HVI).
The report, which also revealed a 1.3 per cent decline in dwelling values nationwide, found that rents rose 0.9 per cent nationally during the first month of the financial year to be 2.8 per cent higher over the rolling quarter and up 9.8 per cent over the past 12 months.
Brisbane has experienced the largest housing rent rise over the past 12 months (13.6 per cent), as well as the largest rent increase in the three months leading into July (4.2 per cent). Meanwhile, the regional market in the Northern Territory experienced the most growth of the broad state markets, with rents up 0.3 per cent in that same three-month period.
Tim Lawless, research director at CoreLogic, said that in addition to increasing rents, the number of available listings has fallen by a third in comparison to the five-year national average, compounding an already tight rental market that has seen vacancy rates sit at around 1 per cent for many markets nationally.
Mr Lawless said there appears to be no reprieve for the rental market in sight, as there doesn’t appear to be an increase in supply on the horizon, which will further hinder the crisis as demand continues to increase with international migration picking up post-pandemic.
“Such widespread and rapid rental growth is likely to remain one of the key domestic factors pushing up inflation, along with construction, food, transport and energy costs.
“While some of these can be attributed to global supply chain issues, the rental situation is a domestic one caused by a combination of tight supply and amplified demand,” he explained.
“Logically, we will probably see a reversal of the pandemic trend towards smaller rental households as tenants look to maximise their occupancy and spread rental costs across a larger household.
“To this end, rental values are rising fastest in the more affordable unit sector as tenants seek out cheaper rental options.”
The HVI also outlined that, in light of rents rising quicker than values, yields are consistently improving. The combined capitals have seen gross yields increase from a record low of 2.96 per cent in February this year to 3.20 per cent last month.
Sydney and Melbourne have experienced the most rapid yield recoveries, of 45 and 40 basis points to 2.8 per cent and 3 per cent, respectively. Darwin has reported the highest gross yields of any capital (6.1 per cent), while regional Northern Territory experienced the highest non-capital rise, at 6.9 per cent.
“Such tight rental markets, improving yields and stronger buying conditions should help keep a floor under investment demand,” Mr Lawless concluded.
REB recently reported on HVI analysis that the housing downswing had accelerated across five of Australia’s capital cities.