Weekly rents hit record high while vacancy rates reach new lows
The national rental market was extremely tight over the first quarter of 2023, as weekly rents hit record high while vacancy rates reached new lows, according to PropTrack Rental Report March 2023.
At the end of March, the median weekly advertised rent nationally was $500 per week, up 11.1% over the past 12 months – that’s more than twice the increase in rents over the prior year (4.7%).
“Rental vacancy rates were edging lower due to exceptionally strong demand for rental accommodation and an ongoing shortage of supply,” said Cameron Kusher (pictured above), PropTrack director of economic research and report author. “As a result of these conditions, properties were leasing quickly, and landlords were afforded scope to increase rents.”
The first quarter also saw advertised rents for houses increase by 6% and for units by 4.3%. Over the 12 months to March, advertised house rents rose 10.4%, with unit rental growth marginally higher at 11.6%.
“The challenges for renters are being exacerbated by the fact that higher interest rates have reduced borrowing capacities,” Kusher said. “This is making it harder for renters to transition into first-home buyers and more difficult for investors to purchase properties, restricting rental supply.
“The rapid rebound in migration to Australia is also increasing competition for rental properties. Most of the people arriving in Australia don’t own a property in the country and will be seeking somewhere to rent, adding to rental supply shortages.”
The report noted a growing divergence between advertised rental price growth in capital cities and regional markets.
In capital cities, rental market pressures were intensifying due to strong demand and a lack of stock available to lease. Total rental listings sat at historic lows in March after falling 18.3% year-on-year, while the number of enquiries per listing on realestate.com.au lifted 8.3% year-on-year.
These conditions saw combined capital city rents increase by 4% over the quarter and 13% over the year to $520 per week in March.
In regional Australia, conditions were softening as pandemic-induced trends subside. Total rental listings regionally rose 22.5% year-on-year to sit at their highest level since July 2020. Demand was also moderating in the regions, with the number of enquiries per listing regionally on realestate.com.au down a significant 41.7%.
That saw advertised rents in the combined regional market hit $460 per week in March, up 2.2% over the quarter and 4.5% over the year.
Most capital cities and regional areas saw an increase in advertised rents over the first quarter, except in Regional SA and Canberra, where rents remained unchanged.
“These rental pressures are being felt acutely in Sydney, Melbourne, and Perth, while regional
markets are seeing demand soften as pandemic-induced trends subside,” Kusher said. “Fewer people are leaving capital cities for regional areas, some are returning to the capital cities and those who are staying regionally are likely now purchasing. These trends are expected to continue, leading to a further easing of regional rental pressures.
“The biggest strain on the rental market is the lack of new rental supply, particularly in the larger capital cities. Investors continue to exit the market and few new investors are entering. Although there is a lot of housing supply under construction, most has been targeted toward the owner-occupier market rather than investors.
“Absent a return of investors to the market or a big increase in first-home buyer numbers, it seems unlikely that the strong demand and insufficient rental supply will be rectified any time soon. This means the cost of renting is expected to continue rising – particularly in capital cities.”
To view the full report, visit the realestate.com.au.
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