️ Highlights:
1. The national median weekly advertised rent on realestate.com.au increased by 3.8% over the quarter and 14.6% over the year, indicating significant competition for limited rental stock.
2. Major capital cities are driving the strong demand and limited supply in the rental market, while smaller capital cities and regional areas are seeing easing conditions with reduced demand and increased stock.
3. Higher rents make it challenging for first-home buyers to save deposits, as borrowing capacities have reduced and prices continue to rise.
4. The rapid rate of migration to Australia, particularly from those who do not own property, is exacerbating competition for rentals.
5. The low supply of rental stock calls for additional housing, but dwelling approvals and commencements are at decade lows, making it unlikely that the situation will change in the near-term. Solutions should focus on better utilization of current properties, investment in the housing market, and support for first-time buyers.
The PropTrack Rental Report for the September 2023 quarter, authored by Cameron Kusher, Director of Economic Research, presents a comprehensive analysis of the rental market in Australia. The report was first published on October 30, 2023, and provides an in-depth examination of the trends and figures that characterize the current rental landscape.
Key Findings
- The national median weekly advertised rent reached $550, marking a 3.8% increase over the quarter and a significant 14.6% rise over the year.
- Major capital cities are driving the strong demand and limited supply, while smaller capitals and regional areas are experiencing eased conditions.
- The report indicates a moderate increase in lending to investors, suggesting some investor activity in the market.
- High rents are impacting first-home buyers’ ability to save for deposits, compounded by reduced borrowing capacities and rising property prices.
- Australia’s rapid population growth, primarily driven by net overseas migration, is intensifying competition for rental properties.
- The federal government’s target to build 1.2 million new homes over five years faces challenges with dwelling approvals and commencements at decade lows.
Market Dynamics
- Rental prices have risen sharply, with the median weekly rent for houses at $550 and for units at $520.
- Rental growth has slowed in the past quarter, particularly in capital cities, as the cost of renting has increased.
- Gross rental yields have improved, with national yields at 4.2%, reflecting a rebound as rents rise faster than home prices.
- New rental listings have decreased, with the lowest number in September for over a decade, highlighting the tight supply of rental stock.
- Total rental listings have fallen, with historic lows in available properties to rent, especially in the largest capital cities.
- Rental days on site have increased slightly, indicating a slight easing in the immediate demand for rentals.
- The national rental vacancy rate is at a historic low of 1.1%, with house vacancy rates even lower than unit vacancy rates.
Outlook
- Rental prices are expected to continue rising in major capital cities due to low supply and strong demand.
- Conditions are anticipated to change slowly, with smaller capital cities and regional areas potentially seeing increases in rental stock.
- The report underscores the critical need for more housing and suggests that serious consideration be given to financing and capacity for new construction projects.