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Rents are up across the board, but data reveals that certain segments of the market are operating at different speeds.
As Karen Dellow, senior data analyst at PropTrack, explained national weekly rents for units have been performing stronger against houses for the past 12 months, with this trend most pronounced in the cities but still prevalent across the regions as well.
PropTrack’s data revealed that year-on-year, weekly house rents across the country increased by 10.5 per cent, amounting to an increase of $55 per week, while unit rents jumped 17 per cent, or a weekly rise of $80.
Looking at just the capitals, the gap is even wider. All of the nation’s capital cities have a larger increase in unit rents compared to houses, with the exception of Canberra and Hobart, which remained fairly steady.
Brisbane recorded the largest variance for rental price growth between houses and units, with the former recording a 9 per cent jump and the latter rising by 18.9 per cent.
The difference in Sydney was not much smaller, where house rents increased over the past year by 10.7 per cent, compared to 18.2 per cent for units.
As Ms Dellow explained, the reason for the substantial difference in price growth can be traced back to the performance of unit rents during the pandemic, which gave the segment more room to expand as interest flowed back into apartment living.
“Units were very affordable during the pandemic as many lay empty in the cities due to the lack of overseas students, migrant workers and interstate migrants. Prices dropped below normal market value because demand was so low, especially in Melbourne and Sydney, but at the same time house rents continued to rise,” Ms Dellow noted.
“It wasn’t until the end of 2021 and early 2022 when unit rental prices began to recover, coinciding with the opening of the borders. Since then, a combination of increased demand and low stock has driven up rents as more potential renters are turning up to inspections and competition is at an all-time high,” the analyst said.
She highlighted that with units sitting at a lower price point, renters are finding it easier to offer above the asking price to beat the competition, driving prices further upwards. At the same time, interest has coalesced in the market as renters who might previously have preferred a house have found themselves priced out of that market.
With the current state of Australia’s market, Ms Dellow said that growth in either segment is not expected to significantly slow any time soon, though unit rental prices are not expected to grow so much as to meet the rental price of houses.
“Current market conditions mean weekly rents will continue to grow throughout 2024 and financial pressures for renters means that units will be the more affordable option than houses,” she stated.
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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