As property prices across the country lose steam, it appears rental prices are doing the exact opposite. According to the most recent rental market data released by Core Logic, rental values across the country increased by 2.9% in the June quarter, up on the 2.6% rise we saw in the March quarter. The driving factor? Incredibly low stock.
Unlike the house price market, where there is a different story to tell in every state, when it comes to the rental market, cities and regions across the country are painting virtually the same picture – it’s a landlord’s market from coast to coast.
Rents are 9.1% higher across capital cities and are up 10.8% in regional areas compared with June 2021. The national vacancy rate – the percentage of available rental properties – currently sits at a very tight 1.2%, compared to a rate of 2.2% this time last year.
Adelaide recorded the strongest quarterly growth in rents (4.3%) coupled with an extremely low vacancy rate (0.3%). The median rental price in South Australia’s capital is now $492, up 10.6% in the last twelve months.
In Brisbane, rents rose by 3.9% over the quarter to an average of $547 per week – up a huge 12.1% year on year. The vacancy rate in Queensland’s capital remains at a record low of 0.8%.
Sydney and Perth both recorded quarterly rent rises of 2.9%, with an average rental property now costing on average $643 and $515 per week respectively. In the last twelve months, Sydney rent prices have gone up 9.7% compared to 6.7% in Perth.
The nation’s capital, Canberra, maintained its position as Australia’s most expensive capital city to rent with a median rental price of $690 per week, up 2.2% on last quarter.
In Melbourne, despite recording steady growth across the quarter (2.3%), the city has now replaced Adelaide as Australia’s most affordable rental market. The median cost to rent is $480 per week.
Good news for existing landlords and those looking to invest, this strong rental growth coupled with falling property values over the quarter has led to an increase in rental yields across the country. National dwelling rental yields rose 10 basis points over the June quarter, the strongest quarterly rise in yields since April 2019. Strong rental yields are likely to entice first time investors as well as those eager to expand their existing portfolios as high rental yields ultimately translate to positive cash flow.
The combination of falling house prices and tightening vacancy rates has tipped the market strongly in favour of landlords. For now, there’s no short term reprieve for tenants in sight as the return of expats and international students will continue to put upward pressure on rental prices as demand is squeezed.
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