After a tough few years for renters, there is now a glimmer of hope with house rents across the combined capitals holding steady for the first time in almost three years.
Domain’s Rent Report December Quarter 2023 found that despite asking rents sitting at record highs across most of the capital cities, extreme rent hikes are starting to lose traction.
Across the capital cities, house rents remained flat over the last quarter, with Melbourne and Darwin seeing no change in rents.
Asking rents for all dwellings have now hit $600 per week with Canberra houses and Darwin and Hobart units the only locations not seeing record-high rents.
The seasonal lift in vacant rentals as the rental market moves into the changeover period has pushed up the vacancy rates across most capital cities, with Sydney (1.3 per cent), Melbourne (1.2 per cent) and Brisbane (0.9 per cent) sitting roughly at a 12-month high, a 3.5-year high in Darwin (1.7 per cent), and the highest on record in Canberra (2.0 per cent) according to Domain.
While, Adelaide (0.4 per cent) and Perth (0.4 per cent) remain close to record lows, concerningly below 1 per cent for more than three years
Domain’s Chief of Research and Economics, Dr Nicola Powell said the rental market may have turned a corner over the December quarter.
“While the strain on Australia’s rental market remains evident, there’s a glimmer of hope that conditions are easing and rental price growth is slowing,” Dr Powell said.
“Nationally, potential tenants will find greater choice, consistent with the seasonal lift in vacant rentals that occurs at the end of the year as the rental market moves into the busy changeover period.”
Despite the slowdown in rental growth, over the past 12 months, houses have still seen rents increase 9.1 per cent.
The largest jump in house rents was seen in Hobart at 3.8 per cent, Perth at 3.3 per cent and Canberra at 3 per cent.
Unit growth has still been positive, but the growth rate has fallen away sharply over the quarter.
Unit growth was just 0.8 per cent across the capital cities over the quarter, compared to the 20 per cent surge that has occurred over the past 12 months.
Unit rents increased the most in Perth at 4 per cent and Darwin at 3.8 per cent.
According to Dr Powell, there’s been a clear slowdown in rental growth in Sydney with house asking rents seeing a deceleration in growth for the second quarter in a row, rising at half the pace of the previous quarter.
While unit rents held steady for the first time in two-and-a-half years at $680 per week, breaking the longest stretch of rising asking rents in the city’s history, following the previous nine quarters of consecutive growth.
In Melbourne, house and unit rents holding steady for the first time in just over two years, ending the longest and steepest stretch of rising house and unit asking rents in the city’s history, following eight quarters of consecutive growth.
Brisbane house rents rose to another record high over the December quarter, to reach $600 per week.
Units continue the record-long and steepest stretch of rising rents in the city’s history following the 10th consecutive quarter of growth to produce another record-high median of $560 per week.
Adelaide houses continue the record-long stretch of rising rents following the 14th consecutive quarter of growth to produce another record-high median of $560 per week.
Despite the persistent gains, the pace of quarterly growth continues to slow, now at its smallest increase in three-and-a-half years.
Perth’s rental market continues its record-long stretch of rising rents, as house rents rise for the ninth consecutive quarter and unit rents for the sixth.
While Canberra house and unit rents increased for the first time in a year over the December quarter.
House rents reached $680 per week, remaining $10 lower than the record high seen in March 2023. Unit rents returned to the record high of $560 per week, last seen in December 2022.
Dr Powell said looking ahead, several factors are slowing rental growth, including stretched affordability, more renters opting for house shares and a slow return of investors over 2023.
“We are also likely to see some renters transitioning to homeownership with the new first-home buyer incentives in place, such as Queensland doubling the first-home buyer grant and the anticipated federal government’s ‘Help to Buy’ shared equity scheme, along with a potential interest cut that will improve borrowing capacity and mortgage affordability,” she said.
“We forecast a tipping point to be reached at some stage this year, making a return to a more balanced rental market.”
