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Annual growth in rent rates continued to boom in 2023, outstripping growth in home values for the third time this decade.
The past 10 years have seen wide fluctuations in Australia’s housing market, with some years seeing median price growth hit 24.5 per cent, and other years seeing it plummet to -4.9 per cent.
When it comes to rental values, growth has been far more consistent. Rent rates have not gone down in over 10 years, and the past three years have seen massive annual jumps of over 8 per cent.
According to CoreLogic, December saw the nation’s median rent price rise by 0.6 per cent, bringing the 2023 total growth up to 8.3 per cent.
“Annual growth in rent values has accelerated slightly, from the 8.1 per cent increase recorded in the 12 months to October,” CoreLogic reported.
“Rent values have had three strong years of consecutive increases, against mixed capital growth performance.”
Unsurprisingly, rent growth in Australia’s combined capitals substantially outstripped the regions, coming in at 9.8 per cent across all major cities in total. Nevertheless, regional rents still returned strong growth at an average of 4.3 per cent.
CoreLogic stated: “Gross rental yields have moved slightly higher nationally in the past few months. This is due to the slight slowdown in the pace of capital gains against a slight uptick in rent value increases through the December quarter.”
The Australian gross rental yield for December was 3.7 per cent, with the highest yields seen in Darwin (6.5 per cent), the regional Northern Territory (6.9 per cent) and regional Western Australia (6.4 per cent).
Weaker rental yields were seen in Sydney and Melbourne, at just 3 per cent and 3.5 per cent respectively.
Looking forward, housing supply looks unlikely to pick up anytime soon. CoreLogic data revealed that dwelling approvals for the past six months have averaged 13,760 a month, well below the decade average of over 17,000.
The exception was the famously volatile apartment sector, which saw a significant 7.2 per cent lift in planning approvals in November.
Ultimately, CoreLogic concluded that “approvals trended a little higher over 2023, but remain relatively low overall”.
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