Rental growth in all Australian capital cities is increasing at double the annualised inflation rate.
SQM Research data shows the national average rental increase in the past 12 months is 14% – well ahead of annual inflation of 6.1%.
In some locations it is up to triple the inflation rate, including Sydney and Brisbane where house rents are up 20% and Melbourne where unit rents are up 19%.
AMP chief economist Shane Oliver says he can’t remember a time when rents were rising so quickly. “I think you would have to go back to the 1970s,” he says.
Real Estate Institute of NSW CEO Tim McKibbin says the significant lack of supply is having a big impact on the rental market.
Analysts say rent rises are not unexpected as the market was suppressed for extended periods during the pandemic, as a result of emergency moratoriums which also banned evicting tenants.
Banking regulators also introduced macroprudential limits which cut off investment lending activity among the major banks leading to a shortage of investors and therefore rental properties.
With building approvals dropping on the back of increased construction costs and uncertainty, many are predicting no major changes to rental supply levels in the near term.