Rental markets across Australia are diverging, with rents increasing at record levels in the major capital cities and weakening in the smaller cities. This is according to new data from Domain, which show rents increasing by 8.1% in Sydney units and 6.1% in houses during the June quarter.
In Melbourne, unit rents lifted by a record 4.2% over the quarter, surpassing the 4% increase for houses during the same period. Brisbane units saw rents increase by 6% to $530 and houses climbed by 3.6%, while Canberra unit rentals remained flat over the quarter, and houses dropped by 2.2%. Hobart unit rents declined by 6.3% while houses dropped by 3.6%.
The year-on-year difference is more noticeable, with unit rents rising more than twice as fast as houses in Sydney and in the combined capital cities. In Melbourne this rate was nearly double, while Melbourne city apartments saw the largest increase, rising 45%, followed by West Melbourne, with a 33.8% increase.
Sydney’s inner suburbs Eastlakes, Haymarket, and Zetland had increases of between 33% and 37% during the same period. Rental affordability has worsened for tenants, with many seeking out cheaper housing options in the form of units and shared houses.
All capital cities and regional Australia have seen a slight increase in rental vacancy rates, though they still remain ‘stubbornly tight’.
Sydney’s vacancy rate was up 0.3 of a percentage point to 1.2%, 0.2 percentage point to 1% in Melbourne, and 0.1 of a percentage point to 0.8% in Brisbane.
Hobart and Canberra saw larger increases with 0.5 percentage points and 0.3 percentage point respectively. Despite slight improvements in some areas, the long-term outlook is still firmly in favour of landlords, with Domain’s estimates suggesting that in order for a balanced rental market to occur, the current estimated 24,000 rental listings need to double.
This high level of overseas migration, combined with limited rental stock, is likely to continue to put upwards pressure on rental growth in the foreseeable future.
