No Relief in Sight: Rents Surge Again

Capital city residential rents rose yet again during the past month despite the vacancy rate softening marginally.

But that easing of the vacancy rate, to 1.3 per cent in December compared to November’s 1 per cent, is down to seasonal factors, including students finishing tenancies, according to SQM Research.

During the 30 days to January 12, capital city asking rents rose by 2.2 per cent with the 12-month rise now at 24.6 per cent.

Rents across all regions rose by 18 per cent for the same 12-month period.

The national median weekly asking rent for a home is now $556.72.

Sydney recorded the highest weekly rent for a house at $899.98 a week, while Adelaide apartments offered the best rental affordability of all capital cities at $395.93 a week. 

In the NSW capital, rents increased across all homes by 2.2 per cent during the month and an eye-watering 30.1 per cent for the year.

Melbourne rents rose 1.7 per cent in December and 24.7 per cent for the year while Brisbane was up 1.7 per cent for the month and 23.8 per cent for the year.

The total number of rental vacancies in Australia is now 39,568 residential properties, up from 31,924 in November.

Sydney rose from 1.4 per cent on the previous month to 1.8 per cent in December; Melbourne from 1.5 per cent to 1.7 per cent; and Brisbane from 0.8 per cent to 1.1 per cent.

Canberra and Darwin vacancy rates rose to 1.9 per cent from 1.4 per cent and 1.5 per cent from 1.2 per cent respectively.

▲ The average asking rent across all home types in Melbourne was up 1.7 per cent in December.

In the smaller capital cities, Perth, Adelaide and Hobart, vacancy rates were below 1 per cent during December at 0.5 per cent, 0.6 per cent and 0.6 per cent respectively.

Vacancy rates in the Sydney CBD, Melbourne CBD and Brisbane CBD increased to 3.6 per cent, 3.3 per cent and 1.8 per cent last month.

SQM Research said it still has a warning in place for extreme tight conditions in the rental market for January, February, and March 2023 for most capital cities. 

“The rise in residential property vacancies was to be expected given the annual exodus of students at the end of the year,” SQM Research managing director Louis Christopher said.

“This should quickly turn over in January and February in particular—normally a time when rental demand surges and there is short supply.

“At this stage asking rents are still surging ahead. We are just not seeing any relief.

“However, I remain hopeful that later in 2023 we will see some type of stabilisation in the rental market once we see higher completion rates and a slowdown in housing formation.”

On the flip side, the surge in rents is pushing up rental yields, especially with falling prices, Christopher said.

“I believe would-be investors will be attracted to higher rental yields in later 2023, once we see a pause in cash rates,” he said.