Let’s talk rents: Spiralling skywards in Australia’s suburbs

By Our Reporter
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Representational Photo by Jon Tyson on Unsplash

Australia is witnessing a considerable shift in the rental landscape, a trend that is unabated and continues to make headlines. More than 90% of house and unit markets across the country have seen an upsurge in rents in the financial year 2022-23, a suburb-level analysis of CoreLogic’s Mapping the Market interactive tool reveals.

In the markets analysed, nearly two-thirds of unit suburbs clocked an annual rent increase of 10% or more, a scenario mirrored in more than one-third of house markets. The Mapping the Market tool by CoreLogic offers a granular insight into the 12-month change in rental value index by suburb, by gauging rental income based on listings information and individual property attributes.

Certain regions like Adelaide, Perth, and Regional Western Australia stood out in terms of rent value uplift. These areas witnessed a year-on-year increase in rents across 100% of the suburbs analysed, for both houses and units. Perth, in particular, registered a notable pick-up in momentum since early 2022, with rent values soaring by 13.4% over the past year, marking an impressive 41.8% increase since the dawn of the pandemic in March 2020.

CoreLogic Economist Kaytlin Ezzy pointed out that a shortage in rental listings is applying upward pressure on rents, with overall rental supply being adversely impacted by higher interest rates. “Investors are naturally inclined to be cautious about the housing market during economic downturns. The significant increase in interest rates has synchronised with a 23.6% dip in new housing investment lending from April 2022 to May this year. Nevertheless, we’ve observed a slight recovery in investment lending in recent months, bouncing back by 10.0% from a nadir in February this year,” she explained.

Source: CoreLogic

A surge in overseas migrants, who predominantly rent in inner-city unit areas, is propping up rental demand, leading to a supply-demand imbalance. “Perth is feeling this pinch acutely, with total rent listings now about 50% lower than the historic five-year average,” added Ezzy.

The tale of rent value increases was consistent in Brisbane, Adelaide, Perth, and Darwin, where 100% of unit markets saw a rise over the 12-month period ending in June. However, a few exceptions emerged in Sydney, Melbourne, and Hobart where certain markets recorded falls in unit rents.

Rental growth in capital city house markets showcased more diversity, with 147 of the 1,686 suburbs analysed registering a decline. Canberra, in particular, saw weaker population growth, looser rental supply, and relatively poor affordability influence this trend.

“While annual rental increases remain broadly geographically widespread, it’s likely we’ll see the pace of rental growth continue to moderate over the coming months, as cumulative rental growth nudges more renters towards their affordability threshold,” Ms Ezzy conjectured.

Source: CoreLogic

The Mapping the Market tool also pointed to an upward trend in capital growth recovery nationally. Nearly 80% of house and unit markets exhibited a quarterly increase in home values in the three months to June, a stark contrast to the 80.7% that experienced a fall between October and December the previous year. This may signal a loosening of rental markets in the year ahead, as investor confidence in the housing market could be bolstered by stronger capital growth conditions.

Among the most significant house rent increases were the neighbouring southwest suburbs of Campsie and Belfield, likely reflecting a spill-over in demand from popular inner-west suburbs, as well as migration trends. The Inner South West of Sydney typically records one of the highest net overseas migration figures across the country, alongside Parramatta and the City and Inner South of Sydney.

For the top 20 unit rental markets by annual growth, Sydney overwhelmingly dominated the list, with the exception of Travancore in Inner Melbourne. Each of the top-performing unit rental markets are very well serviced by transport, are close to the CBD and are high amenity areas. This makes them highly desirable to both international and interstate migrants, and young professionals, explaining the hefty rent increases in these regions.

CoreLogic’s Mapping the Market tool is an invaluable resource providing visibility of housing prices and value changes across thousands of Australian suburbs. Interested individuals and organisations can access the map at www.corelogic.com.au/our-data/mapping-market.


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