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Stagnation in Canberra somewhat slowed the trend, but the vast majority of the country experienced significant rises in rents over the course of the 2022-23 financial year, according to new data.
CoreLogic reported that 90 per cent of Australian suburbs saw rental increases for both house and unit markets during that period. Within those areas, two-thirds of units and a third of houses saw prices rise by 10 per cent or more.
Adelaide, Perth and regional Western Australia experienced the largest price swings, with 100 per cent of the suburbs within their bounds reporting a year-on-year increase across both houses and units.
CoreLogic economist Kaytlin Ezzy said the shortage in rental listings had been a major contributor to upward pressure on rents, with higher interest rates having a negative impact on supply.
“Investors tend to shy away from the housing market during negative economic shocks,” she explained.
“The sharp rise in interest rates has coincided with a 23.6 per cent fall in new housing investment lending between April 2022 and May this year, and this includes a slight recovery in investment lending in recent months, which has lifted 10 per cent from a low in February this year,” the economist added.
On the demand side, Ms Ezzy said that record levels of overseas migrants had bolstered demand for rentals, particularly in the inner city unit precincts, adding to an already concerning imbalance between supply and demand.
“For Perth in particular, there is a persistent shortage of rentals, with total rent listings now about 50 per cent lower than the historic five-year average,” she noted.
Unit markets in Brisbane, Adelaide, Perth and Darwin all saw rises across the previous financial year, while just three markets in Sydney (Long Jetty -3.7 per cent, Wyong -2.5 per cent and The Entrance -0.03 per cent), two markets in Melbourne (Rosebud West -2.3 per cent and Hastings -0.5 per cent) and one market in Hobart (Claremont -0.2 per cent) recorded marginally falling prices for unit accommodation.
Don’t let a few outliers in Sydney fool you. The NSW capital may have seen a couple suburbs drop back, but by and large Australia’s biggest city recorded some of the country’s most extreme gains.
“Despite a few minor declines in the city’s Central Coast region, Sydney units continue to record some of the strongest rental growth across the country. Units in Sydney’s inner city market of Haymarket recorded the highest annual rise, up 32.6 per cent or $276 per week, followed by Georges Hall (31.3 per cent) and Arncliffe (30.9 per cent) in the city’s inner south-west,” Ms Ezzy said.
Coming out of a tight market in 2020, Canberra was the only city to see price drops that could be considered significant – 18 unit markets in Canberra recorded a decline in rent value over the past financial year.
The city was only one of two, alongside Hobart, where supply was making positive gains. Rental listings were trending well above the previous five-year average in these two markets. Total rent listings in Canberra at the end of the financial year totalled almost 2,400 compared to the historic five-year average of around 1,900 during a normal July.
The rental market for houses painted a less extreme portrait, with 147 of the 1,686 suburbs analysed recording a decline. This, however, was heavily influenced by Canberra, where weak population growth, more supply and already elevated rental prices saw just two suburbs (Watson 0.8 per cent and Crace 0.1 per cent) record an upward swing in rents for houses.
Ms Ezzy noted that while a lack of supply will likely keep rents elevated in the year ahead, price increases are expected to slow – though largely because renters simply can’t afford to pay more.
“While annual rental increases remain fairly geographically widespread, it’s likely we’ll see the pace of rental growth continue to moderate over the coming months, as cumulative rental growth pushes more renters towards their affordability ceiling,” she commented.
ABOUT THE AUTHOR
Juliet Helmke
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.
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