Recent data from Domain indicates the market is beginning to rebalance after years of rapid rent increases, with growth becoming more uneven and selective depending on location and property type.
Over the December quarter, house rental asking prices either fell or remained unchanged in cities including Melbourne, Adelaide, Perth and Darwin. Despite this, rents across all combined capital cities still rose by 2.3 per cent, or $15, showing that overall pressure remains. Brisbane recorded the strongest quarterly increase at 3.1 per cent, followed by Hobart and Canberra. On an annual basis, Hobart experienced the largest rise in house rents, with Brisbane and Perth close behind. Melbourne stood out as the only capital city to record an annual decline, with house rents down 1.7 per cent and sitting at the lowest median level among capitals.
Unit rents told a slightly different story. Nationally, asking prices for units were flat over the quarter, even though most capitals were already at record highs. Over the year, unit rents rose by more than 3 per cent, with particularly strong growth in cities such as Brisbane, Darwin and Canberra. In many markets, units are now only marginally cheaper than houses, with the average capital city unit rent just $15 per week less.
Sydney continues to be the most expensive city for renters, with median house rents reaching $800 per week and units averaging $750. The high cost of houses has driven more renters towards units, although this shift has contributed to stronger unit rent growth in several cities. Overall, rent changes are now highly dependent on both geography and property type, reflecting a market that is no longer moving uniformly.
Low vacancy rates remain a major challenge. Hobart has the tightest rental market in the country, with vacancies at just 0.3 per cent. Perth, Adelaide, Darwin and Brisbane are also below 1 per cent. Regional Australia continues to face severe supply constraints, despite a slight improvement in recent months. While capital city vacancy rates have edged up to 1.1 per cent, this is still well below levels considered balanced.
Although rents are flattening in some areas, the rental crisis is far from over. Many tenants are simply unable to absorb further increases, with high housing costs requiring incomes above $100,000 in many cases. Looking ahead, Domain expects conditions to remain landlord-favourable in the near term, though increased investor activity and government support for first-home buyers could gradually ease supply pressures. However, the possibility of future interest rate rises could keep more people in the rental market for longer, placing renewed upward pressure on rents.
Contact Accountancy Insurance
We would love to hear from you.
About Accountancy Insurance
Thousands of accounting firms offer our tax audit insurance solution, Audit Shield to their clients.
Find out why.