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While new data from research firm CoreLogic indicates rental growth is easing, it also paints a picture that it’s harder to secure a rental than ever before.
According to the firm’s Quarterly Rental Review for July to September 2023, Australia’s vacancy rate fell to a new record low 1.1 per cent in September, with Adelaide (0.3 per cent), Perth (0.5 per cent) and Melbourne (0.8 per cent) all turning out sub-1 per cent vacancy rates.
Inspiring this plummeting of available rental properties is a continuation of an extreme shortfall in rental listings, which has resulted in the total count of national rental listings falling to its lowest level since November 2012.
CoreLogic economist and report author Kaytlin Ezzy explained: “The situation of low rental vacancy rates and insufficient housing supply is a broad issue impacting regions around the country to different extents.”
In addition to the listings shortfall, Ms Ezzy noted record high net overseas migration, impacted by net arrival figures exceeding departures, has played a key role in this reduction of available rentals.
Over the four weeks to 1 October, the total count of national rental listings fell to its lowest level in nearly 11 years, with around 90,153 properties available for rent. Ms Ezzy revealed this equates to a rental shortfall of around 47,500, with total listings down 15.1 per cent on the levels reported this time last year, and 34.5 per cent below the previous five-year average.
And while it may be doom and gloom for prospective renters, tenants with a roof over their head will be relieved by CoreLogic’s data concluding the pace of rental growth has continued easing.
After recording the smallest monthly rise since September 2020 in August (0.4 per cent), national rents ticked up 0.7 per cent in the ninth month of the year, Ms Ezzy revealed. Sydney, Brisbane and Darwin all reported 0.9 per cent increases in rent in September, followed by Perth (0.8 per cent), Melbourne (0.6 per cent) and Adelaide (0.5 per cent).
On the other end of the spectrum, rents dropped 0.7 per cent in Hobart and 0.2 per cent in Canberra.
“Worsening affordability continues to be a significant factor placing downward pressure on the pace of rental growth in recent months,” she said. However, despite the recent easing of rent growth, Ms Ezzy did provide a caveat that nationally rents remain 30.4 per cent higher than they were in mid-2020.
“After recording a small dip over the first few months of COVID, national rents have risen for 38 consecutive months,” she said, adding tenants are now $137 worse off on average than they were in July 2020.
“With the rising cost of living adding additional pressure on renter’s balance sheets, it is likely tenants have hit an affordability ceiling, seeking to grow their households to share the growing rental burden,” Ms Ezzy explained.
Australian capital cities continued experiencing faster rental growth than the nation’s regional pockets, rising 1.9 per cent and 0.7 per cent respectively in the third quarter of the year.
Darwin registered the highest quarterly rate of rental growth (3.3 per cent), followed by Brisbane and Perth (both 2.5 per cent). The Northern Territory capital’s median rent was around $615, with tenants charged $614 and $604 per week in Brisbane and Perth respectively.
In the three months to September, rents also rose in Melbourne (2.3 per cent), Sydney (1.7 per cent) and Adelaide (1.7 per cent), while Hobart and Canberra reported quarterly declines of 2.7 per cent and 0.9 per cent respectively.
The NSW capital possessed the nation’s most expensive rental market ($726 per week on average). In Adelaide, weekly rents ended the quarter at approximately $548, slightly less than Melbourne’s $553.
Hobart’s decline saw it rank as the nation’s most affordable capital, with median weekly rents of $529, while Canberra ranked only behind Sydney in terms of unaffordability with a median weekly rent of $649.
Ms Ezzy pointed out the gulf between house and unit rents continued widening in the September quarter, owing to “worsening affordability in the unit sector, coupled with a potential shift towards larger rental households.” This, she noted, “has likely helped rebalance demand between the two property types.”
“Since peaking at 4.3 per cent over the three months to April, the pace of quarterly rental growth across Australia’s unit sector has plummeted more than two-thirds, taking the gap between the median house and median unit rents from $33 in May to $36 in September,” Ms Ezzy said.
“Much of the unit sector’s relative affordability has been eroded through the recent rental surge, with unit rents rising 11.7 per cent over the past 12 months compared to the 7.1 per cent rise in house rents,” she added.
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