While last quarter saw some relief, it may be short-lived, expert warns
Rents are still spiking in capital cities as supply remains tight, according to new data from PropTrack.
Asking rents rose 6.7% nationally to a median of $495 per week in 2022, according to PropTrack’s latest Market Update report. That marks an acceleration from the prior year’s rise of 4.7%, The Australian reported.
The rise was steeper in capital cities, where increased demand for a limited number of rental properties drove prices up 10% over the past 12 months. Units, up 9.3%, rose more than houses, which were up 8.3%.
The steepest rises occurred in Brisbane and Adelaide, which each rose more than 11% in 2022, The Australian reported.
Regional areas increased 7.1%, a slowdown from 2021’s 10.5% rise.
The December quarter saw some good news, with the market largely holding steady. However, PropTrack head of economic research Cameron Kusher told The Australian that the relief may be short-lived as capital city rents are driven up by people returning from regional areas in the wake of the pandemic. The return of migrants and international students will also put extra pressure on rents.
“The return of the major capital cities is probably the big story here,” Kusher said. “In 2022, we saw rental growth in regional areas start to slow down as not many people continued to move regionally. That eased some of the pressure in those markets, whereas in capital cities, we had people coming back.”
The low number of available rental properties is one of the major drivers of Australia’s current housing crisis, The Australian reported. Rental increases have not yet been sufficient to offset the cash flow issues faced by prospective investors after eight consecutive rate hikes by the Reserve Bank.
Simon Pressley, founder of investor buyers agency Propertyology, told The Australian that new supply is the only way to ease the rental crisis.
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“It’s going to take years for the supply to rebalance itself,” Pressley said. “We are in the perfect storm, the unwanted storm. Those who might have otherwise contemplated adding to that supply can’t afford to do that, or they can but they don’t want to.”
Industry bodies have long been calling for government to address the supply issue. New South Wales alone is facing a shortfall of 48,000 apartments, which could balloon to 60,000 without government intervention, according to a recent report by the Urban Development Institute of Australia.
Sydney asking rents rose 7.7% in 2022 to a median of $560 per week, The Australian reported. Melbourne rents rose 9.8% to a median of $450 per week, on par with Adelaide (up 11.8%) and Perth (up 4.7%). Brisbane asking rents rose 11.4% to $490, Canberra rose 6.3% to $595, Hobart rose 5.3% to $500, and Darwin rose 1.9% to $550.
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