National rental increased 1.9% during the December quarter, culminating in the highest calendar-year growth rate since 2007, according to CoreLogic’s quarterly Rental Review.
The national index in the 12 months to December was at 9.4%, compared to the highest annual growth recorded since January 2007 at 9.44%. This was despite quarterly growth rates easing since peaking in March at 3.2%
Over the fourth quarter, regional rents continued to outpace capital city rents, with city dwellings rising 2.5% against the 1.6% rise in capital rents, pushing the annual regional rental growth rate up to 12.1%. Over a 10-year period, regional house rents were up 33.2% compared to the 24.9% growth across combined capitals. The same period also saw rents increase 41.4% in the regional market, compared to capital city figures of 14.4%.
Tim Lawless, CoreLogic’s research director, said the stronger rental conditions across the regional markets were due to the shift in demand and supply, following a surge in regional population growth through the pandemic, especially across regional Victoria and regional NSW.
“While demand has risen, we generally haven’t seen much of a supply response,” Lawless said. “Australia’s rental market is mostly reliant on private sector investors to provide rental housing. Investors as a proportion of total mortgage demand moved through record lows in early 2021, highlighting relatively low levels of investment activity across the country and also implying relatively low levels of new rental stock coming onto the market. Arguably, the regions have less elasticity in rental markets, meaning when demand rises, supply is less responsive than capital cities where investors are generally more active.”
Among the capitals, Brisbane was the strongest performing rental market over the quarter, rising 2.3%, followed by Canberra and Hobart, both rising 2.1%. Meanwhile, Darwin was the worst performing over the quarter, with rents rising 0.6% over the three months to December, despite posting the strongest annual rental growth of 15.2%.
CoreLogic also reported that Canberra remains the most expensive capital city rental market, with typical dwellings renting for $651 per week, followed by Sydney ($604p/w), Darwin ($561p/w), Hobart ($521p/w), and Brisbane ($507p/w). Adelaide remains Australia’s most affordable capital with a median dwelling rent of $447 per week, followed by Melbourne at $456 per week.
