We know rents are rising across Australia, but the latest inflation data from the Australian Bureau of Statistics gives some interesting insights.
Rents in all capital cities rose over the first three months of the year, and this is not really surprising considering the current 16-year low vacancy rates across Australia.
However while Sydney and Melbourne’s rents increased, their growth remains below other capital cities.
Megan Lieu, Economic Analyst at REA Group commented:
Sydney and Melbourne’s rents grew by 0.2% and 0.3% respectively, while other capitals grew by at least 1% over the quarter.
Over the year, the contrast in growth between our two largest cities and the other capitals is even more pronounced.
While other cities saw rents increase by at least 2.5% over the past 12 months, rents in Sydney and Melbourne actually decreased.
Obviously, this is brought about by the pause in migration and the ongoing shift to remote work caused by the pandemic.
At the same time, many Australians also left the rental market and become owner-occupiers with government housing initiatives such as HomeBuilder and record low-interest rates.
Here’s what’s happening to rents
The weekly advertised rents also show a similar trend for Sydney and Melbourne, based on PropTrack’s data:
Ms Lieu further commented:
Sydney and Melbourne also showed negative or no growth in advertised rent over the year but are showing signs of growth over the quarter.
The reopening of borders and return of international students and office workers has increased demand in our largest capitals and is contributing to a slight rise in advertised rents.
In general, rent growth is now similar across regional areas and capital cities, as seen in the change in quarterly advertised weekly rents.
This is despite the accelerated migration to the regions because of the pandemic.
Ms Lieu commented:
With the return of migrants, low vacancy rates and increased competition in the rental market, we expect rental markets to remain tight over the coming months.
The gap between rent growth in Sydney and Melbourne and the rest of the capitals and regions is likely to narrow with rental demand increasing in our largest capitals and easing in some regional areas.