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Dwelling rents have hit their highest annual growth in over a decade despite the recent slowing, according to the latest report from CoreLogic.
Overall rents in Australia have increased by 6.6% in June on an annual basis. This was the highest annual gain recorded since 2009. On a quarterly basis, the growth in rents slightly moderated to 2.1%, lower than the 3.2% rise in March.
"Following subdued rental performance through much of the 2010s, the Australian rental market has seen an increase in values due to many of the same factors that have led to the current housing price upswing," said Eliza Owen, head of residential research at CoreLogic.
The factors that have helped boost the growth in rents include the increased government stimulus through COVID-19, accumulated household savings through lockdown periods, the swift economic recovery seen as restrictions eased, and a lack of rental supply in some markets.
The high level of growth in rents was apparent in regional markets, which actually outpaced the gains recorded by capital cities.
In fact, regional rents rose by 2.1% over the quarter, higher than the 1.9% increase in capital cities.
Furthermore, it is crucial to note that there are pockets of the rental market that remain subdued due to the impacts of the COVID-19 pandemic.
“In Sydney and Melbourne, unit rents continue to show year on year decline, at -1.1% and -6.4% respectively. As noted in previous quarters, these cities, which have historically had the highest intake of international migrants, have seen rental demand most impacted by international border closures amid the pandemic," Owen said.
Aside from Syndey and Melbourne, Hobart also took a hit at the initial onset of the COVID-19. The Hobart rental market saw a peak-to-trough decline of 5.0% through 2020.
"I think we can expect a similar outcome for the Australian rental market as the purchasing market. Very high rental growth is unsustainable while income growth remains subdued. The result will likely be more subdued growth rates in the coming quarters, especially as investor participation trends higher, delivering more rental supply," Owen said.
