Renting costs remain elevated, but growth rates are slowing, according to recent PropTrack data.
High rents, but hope for Aussie renters,
National rent prices continued to rise in the September quarter. However, the pace of rental growth is beginning to slow down, according to the latest PropTrack Market Insight report.
The national median weekly rent has reached $610, reflecting a quarterly increase of 1.7% over the last three months. In contrast, the annual growth rate of 7% marks the slowest rental growth since September 2021.
Cameron Kusher,
PropTrack’s director of economic research, noted that increased rental stock is influencing demand alongside rising rents.
He explained that the availability of more rental properties is impacting how much renters can afford.
Kusher further stated, “With more stock available for rent, and the cost of renting rising above inflation, demand is affected.”
Thus, while rents remain higher compared to last year, the speed of price increases is decreasing.
This change indicates an easing of rental market pressures, and Kusher expects this trend to continue moving forward.
In capital cities, advertised median rents increased by 1.6%, reaching $640 per week during the quarter. Meanwhile, regional rents experienced a slightly higher increase of 1.9%, now averaging $540 per week.
When considering year-on-year changes, capital city rents grew by 6.8%, marking the slowest growth since December 2021. Conversely, regional rents surged 8% over the same period, indicating strong demand in those areas.
Despite ongoing challenges for renters, Kusher anticipates a “more balanced” market in the near future. He noted, “Although rental growth is slowing and more stock is available, supply levels still remain low.”
Overall, he believes we can expect more balanced conditions in the rental market over the coming months.
Sydney continues to be Australia’s most expensive capital city for renting a home. The median advertised rent stands at $730 weekly.
This rate remained unchanged over the past quarter, yet it has increased by 5.8% compared to the previous year.
Nikoletta Pal, head of property management for Ray White in NSW, acknowledged the rental prices are still “incredibly high.”
However, she noted that these prices have begun to ease slightly, which is a positive sign for potential renters.
“I would even say that they’ve experienced a slight drop recently. Nevertheless, it’s not significant enough to be affordable for many.”
She added that it has not been dramatic enough for newcomers to enter the market easily.
“But definitely, prices have softened over the last six months,” she continued. “We’ve had to adjust our expectations accordingly.”
Moreover, she observed that there isn’t the competition previously highlighted in the media. Reports suggested there were 40 people lining up for inspections.
In contrast, further south in Melbourne, the median advertised rent is $570 per week. This figure is lower than in all other capital cities, except Hobart.
Mr. Kusher remarked that this situation may be “perhaps surprising to many” renters in the market today.
Philip Middlemiss from Melbourne’s Re-define Real Estate indicated that rental demand has decreased recently. This is primarily because tenants have transitioned into first-time homeowners.
“We anticipated that with investors exiting the market, there would be a lower supply of rental properties,” he explained.
Thus, the current market dynamics are evolving, reflecting shifts in both demand and supply for rental homes.
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“But what we are observing is that for every investment property offered for sale, it has been bought by a first-home buyer.”
This trend indicates that these buyers were previously renting, contributing to a noticeable drop in rental demand in the market.
Mr. Middlemiss pointed out that many tenants find it more economical to pay their own mortgages instead of facing inflated rents.
He noted, “Last week, we conducted a case study for one of our tenants, and the difference was only $30 weekly.”
The current situation has been aided by a slight oversupply of properties for sale. This oversupply occurred as investors left the state due to high land tax and other expenses.
After Sydney, Perth ranks as the second-highest capital city for median rent, currently at $650 per week.
Furthermore, it boasts the highest annual growth rate nationally, which is an impressive 12.1%.
According to Michael Coulson from Perth’s Coulson & Co Real Estate, the market appears to be slowing down somewhat.
“The market heat has diminished compared to what it was around six months ago,” he stated.
Additionally, he mentioned that there seem to be fewer tenants attending home opens than before.
There appears to be a noticeably smaller pool of tenants currently in the market, affecting overall rental activity.
The agency, situated a half-hour south of the CBD, has observed that properties are taking longer to rent than previously.
Data indicates that annual growth in unit rents at 9.1% remains stronger than the growth in house rents at 6.9%.
Moreover, the gap between these two types of rents has narrowed to just $20 per week recently.
Only Hobart, regional New South Wales, and regional Tasmania are witnessing stronger rental growth compared to the previous year.
