Strong regional growth has underpinned a 6.6 per cent increase in rents nationally over the past 12 months, the highest annual growth in more than 10 years.
Regional areas have attracted stronger rental prices, banking an 11.3 per cent annual growth, the highest on record.
Corelogic’s Rental Review for the June quarter recorded a 2.1 per cent rise, down from the 3.2 per cent increase in the previous quarter, while yields decreased from 3.55 per cent to 3.41 per cent.
Regional rents grew 2.7 per cent in the June quarter, compared to 1.9 per cent in Australian capital cities.
Corelogic head of research Eliza Owen said rental price growth was in line with the current housing price upswing.
“Increased government stimulus through Covid-19, accumulated household savings through lockdown periods, the swift economic recovery seen as restrictions eased, and a lack of rental supply in some markets have exacerbated rental price increases, particularly in major centres of regional Australia,” Owen said.
“It is interesting to note that, as with house prices, rent prices are seeing a deceleration in growth at the national level and across each of the capital cities.
“This may reflect affordability constraints, but there could also be higher levels of rental supply as investor activity in the market increases.”
Australian Bureau of Statistics data supports this theory with a 13.3 per cent increase in new finance for investment property acquisitions.
Change in rents (all dwellings)
| Region | Median price | Annual change |
|---|---|---|
| Sydney | $582 | 3.2% |
| Melbourne | $444 | -1.4% |
| Brisbane | $476 | 7.3% |
| Adelaide | $430 | 7.2% |
| Perth | $472 | 16.7% |
| Hobart | $499 | 8.8% |
| Darwin | $548 | 21.8% |
| Canberra | $620 | 7.3% |
| Combined capital cities | $492 | 5% |
| Combined regionals | $441 | 11.3% |
| National | $476 | 6.6% |
^Source: Corelogic
Darwin recorded a 21.8 per cent increase in rental prices, while Melbourne rental prices went backwards, with a 1.4 per cent decline.
Canberra remains the most expensive city to rent with a median rent of $620, while Adelaide remains the most affordable at $430.
Melbourne and Sydney’s unit rental prices continue to feel the long-ranging effects of Covid-19 and progressive lockdowns.
“In Sydney and Melbourne, unit rents continue to show year on year decline, at -1.1 per cent and -6.4 per cent respectively.
“As noted in previous quarters, these cities, which have historically had the highest intake of international migrants, have seen rental demand most impacted by international border closures amid the pandemic.”
Owen said the outlook for Australia’s rental market would follow the fortunes of the purchasing market.
“Very high rental growth is unsustainable while income growth remains subdued,” she said.
“The result will likely be more subdued growth rates in the coming quarters, especially as investor participation trends higher, delivering more rental supply.”
Article Source: www.theurbandeveloper.com