The total number of rental properties listed on realestate.com.au plunged 20.5% year-on-year in September, falling to its lowest level in nearly two decades, as strong demand continues to push rental prices higher, growing at the fastest pace on record in the September quarter.
This was to according to REA Group’s PropTrack Rental Report September 2022, a quarterly rental report combining seven key metrics to provide an up-to-date view of the rental property market and emerging trends.
The decline in total stock came as the number of new listings slipped 10.4% month-on-month, bringing the annual decline to 7.1% YoY. This in turn, has driven low levels of vacancy, with the national rental vacancy rate posting a historic low of 1.6% in September, the report found.
Rental properties are being snapped up quicker than ever, with the median number of days a property was listed for rent was 19 days in September.
The September quarter also saw rents grow at the fastest quarterly pace on record, increasing by 4.3%, driven by limited supply and tight competition.
The capital cities’ rental markets are set to continue to experience tight conditions, though some of the heat has started to come out of the regional market. In the combined capital cities, rents grew by 3.2% over the quarter, while rents were unchanged in regional areas, the PropTrack report said.
“With fewer investors purchasing homes to rent out, the limited supply of stock, coupled with strong demand, is leading to heightened increases in advertised rental prices,” said Cameron Kusher, PropTrack director of economic research and report author. “The growth and tightness in the rental market appears to be shifting from regional areas back to the capital cities. This is being driven by the return of many people who migrated regionally during the pandemic back to capital cities and the lift in overseas migration. This is especially the case in our two biggest rental markets, Sydney and Melbourne.”
Kusher said the solution to the current tight rental market is either more rental supply or less rental demand, or a combination of both.
“While there is some supply coming via build-to-rent, any supply additions are expected to be well and truly outweighed by the increase in demand from the re-opening of international borders and the ongoing decline in purchasing by first home buyers,” he said. “These demand and supply issues can be addressed but none of these factors appear set to change in the near-term, which means a further tightening of rental supply and increases in rental costs seems likely over the coming year.”
