Capitals’ Rent Increases Strongest on Record

Capital city rents rose more than 11 per cent in the past year, the strongest annual rental increase on record.

According to new data from CoreLogic, asking rents were up 0.8 per cent in April, up 2.8 per vent for the past three months and 10.1 per cent higher for the year.

The combined capitals annual rental increased 11.7 per cent in the past year, a record, and largely underpinned by increasing demand for capital city apartments, CoreLogic said.

A surge in overseas migrants and international students coupled with a significant shortfall in rental listings led to the record rises.

CoreLogic said the mismatch between supply and demand continued to be the driving force pushing capital city rents higher.

Over the four weeks to April 30, the total supply of capital city rental listings was 20.9 per cent below the level recorded this time last year and 39.8 per cent below the five-year average.

“With the exception of Hobart and Canberra, vacancy rates across the capitals remain near record lows, and well below the 3 per cent to 5 per cent average rate considered indicative of a balanced rental market,” a spokesperson said.

“Each capital city, excluding Darwin (-0.3 per cent) and Canberra (-0.2 per cent) recorded a rise in home rental values in April.

“Melbourne recorded the strongest rental appreciation, up 1.4 per cent, followed by Sydney (1.3 per cent), Perth (1.3 per cent) and Adelaide (0.8 per cent).

“Regional SA (1.1 per cent) recorded the highest monthly rental increase across the rest-of-state markets, followed by regional Queensland and regional WA (both at 0.6 per cent).”

Corelogic said momentum was clearly easing across regional rental markets as internal migration rates normalise and vacancy rates move off recent record lows.

Regional rents rose 1.3 per cent over the past three months and 6.0 per cent over the year to April, down from a cyclical peak of 12.5 per cent over the 12 months to November 2021.

▲ Melbourne has lost its position as the country’s most affordable rental capital to Adelaide.

Stronger rental growth through April meant Melbourne ($535 per week) lost its position as the country’s most affordable rental capital to Adelaide ($534), while Sydney ($711) remains the country’s most expensive capital to rent in after displacing Canberra three months ago.

“Growth across capital city unit rents continues to outpace house rents, increasing 1.6 per week and 0.9 per week in April respectively,” the spokesperson said.

“The continued preference for the unit sector reflects the strong demand from migrants and foreign students, who typically first settle in medium to high density housing, as well as a preference for more affordable accommodation. 

“Sydney and Melbourne continue to record the strongest growth in unit rents across the capitals. In April, both cities recorded a new peak rate of growth in both quarterly and annual trends.

“Sydney’s unit rents increased 5.8 per cent for the rolling quarter and 19.1 per cent for the year to April. Melbourne’s unit rents rose 5.0 per cent for the three months and 15.2 per cent over the year.

“It's unlikely there will be much in the way of relief for renters in the short to medium term, with the flow of migrants expected to remain high and rental supply expected to remain low.

“Given that the flow of new unit approvals has held below average since 2018, the rental market will likely continue to have supply issues over the medium to long term.”