Median rents in Australia rose 2.5% in the three months to June, down from the 2.8% increase seen over the May quarter – the first time the pace of rental growth has slowed since November last year.
This was according to CoreLogic’s Quarterly Rental Review for Q2 2023, which also showed that despite the slowdown in the pace of national rental growth, particularly for units, rental growth remained well above average levels, due to ongoing demand pressures and chronic undersupply.
“The softening in rental growth occurred in spite of an ongoing surge in overseas migration and a continued shortage in rental supply, suggesting an increasing portion of tenants are reaching their affordability ceiling,” said Kaytlin Ezzy (pictured above), CoreLogic economist and report author.
“While rental demand from overseas migrants is likely to remain strong for some time yet, particularly across the largest capitals, we’ve already seen a reduction in domestic rental demand via an increase in the average household size.”
Melbourne, which used to be Australia’s cheapest rental market, recorded the strongest quarterly increase, with dwelling rents rising 3.9% in the quarter to $551 per week.
Adelaide now outranked Melbourne as the country’s most affordable capital for rentals, with typical dwelling rent of $549 p/w, after a 2.5% rental growth in the June quarter.
Hobart could soon snatch Adelaide’s title, given a gap of only $3 per week separates the cities’ rental markets and with the Tasmanian capital seeing a 0.1% decline over the quarter.
With a median weekly rental value of $733, Sydney kept its position as the most expensive capital for the second quarter in a row, with its rental growth at 3.2% over the quarter.
Rents also increased in Perth (3.4%) and Brisbane (2.1%), while Darwin’s dropped by -1% over the same period.
CoreLogic data also showed that growth in national unit rents eased to 3.6% over the June quarter, after posting a new peak quarterly growth rate of 4.4% over the three months to May. National houses rents meanwhile, recorded a milder rise of 2% over the June quarter.
While units remained the more affordable option, renters continued to prefer unit rentals more, which has seen the gap between median house and unit rents narrow from $62 in December 2021 to just $34 in June, CoreLogic reported.
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