As rental markets show signs of stabilisation, the link between population density and rental prices is being questioned, with recent data suggesting that this relationship may be weaker than previously thought, according to PIPA.
The latest quarterly PropTrack Rental Report revealed a deceleration in rental price growth, with national advertised rents rising by 9.1%, or $50 per week, marking the first time in two years that growth has dipped below 10%.
“With rents increasing alongside the cost of living, fewer people will be able to afford these higher prices and will look for cheaper alternatives including smaller properties or share house living, while others may expedite buying a home instead,” said Cameron Kusher (pictured above left), PropTrack director of economic research.
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Despite the slowing growth, the national rental market remains challenging.
“A mismatch between demand and supply of rental stock clearly remains and is unlikely to be rectified any time soon,” Kusher said.
The scarcity of new rental listings continues to challenge renters, with significant shortages of properties available for rent.
A concurrent report by CoreLogic challenges the widely held belief that higher population density leads to higher rental prices.
“Population density across the unit sector provides little explanatory value about unit rental growth over the past 12 months or the past 10 years,” said Tim Lawless (pictured above centre), research director Asia Pacific at CoreLogic. “The relationship between density and appreciation in house rents is even weaker than seen across the unit sector.”
Source: CoreLogic
Australia’s population density is among the lowest globally, with significant urbanisation in cities. This has led to varying approaches to densification across regions. For example, Perth has seen considerable growth through smaller detached housing, while the ACT has increased its medium to high-density housing stock significantly.
The trend of borderless investing continues to grow, with nearly half of property investors looking to purchase outside their state.
Melinda Jennison (pictured above right), president of the Real Estate Buyers Agents Association of Australia, highlighted the trend: “REBAA members have reported increasing levels of interest from property investors keen to adopt a ‘borderless’ approach over the years, which is a trend that is likely to continue.”
Read the article in full at the PIPA website. The article was originally published in Australian Property Investor.
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