According to CoreLogic’s latest Quarterly Rental Review, the national rental market has shown signs of cooling, with rent values rising by just 0.4% in the December quarter – the smallest Q4 increase since 2018.
This marks a significant deceleration compared to previous years, signaling that the market may have passed the peak of the recent rental boom.
Over the past year, national rents have increased by 4.8%, a drop from the 8.1% surge in 2023. This is the smallest annual increase since early 2021, indicating a return to more stable growth levels.
Kaytlin Ezzy (pictured above), CoreLogic economist, highlighted that rental affordability remains a major concern, having worsened since the COVID-19 pandemic began, with rents rising by 36.1% nationally, which equates to an additional $171 per week.
As of September 2024, renters were allocating roughly 33.0% of their pre-tax annual income to cover rent, the highest since records began in 2006.
Ezzy noted changes in living arrangements due to affordability pressures.
“The net result has potentially seen some prospective renters delay their decision to leave the family home, while others have looked to form larger share households,” she said.
This trend is evident in both the house and unit sectors, with houses experiencing slightly stronger rent increases due to these shifts.
The demand for rental properties has been affected by a decrease in net overseas migration, which is expected to return to pre-COVID averages by the 2026/27 financial year, CoreLogic reported.
Simultaneously, a 26.3% increase in the value of new investor lending over the past year suggests a growing supply of rental properties, contributing to an easing in vacancy rates from 1.4% in November 2023 to 1.9% by the end of 2024.
While the combined regional areas have seen a healthier rental growth of 6.2% over the year, the major capitals have experienced more subdued increases, with Sydney and Melbourne notably slowing from double-digit growth in 2023 to just 3% and 4.1% in 2024, respectively.
In contrast, Hobart and Canberra have seen an uptick in rental growth following previous declines.
The national gross rental yield remained steady at 3.7% throughout the year, with some capital cities seeing shifts due to varying property value changes and rental adjustments.
Melbourne’s yields have increased slightly, whereas cities like Brisbane and Adelaide have observed declines in yields due to significant property value increases, CoreLogic reported.
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