It’s been a nightmare for tenants over the last few years, hasn’t it?
Historically low vacancy rates and skyrocketing rents at a time when the general cost of living has made things very difficult for that third of the Australian population that rent their accomodation
However the latest Domain Rent Report suggests there is finally a glimmer of hope for renters.
Of course, it doesn’t suggest rents going to fall, in fact asking rents sat at record highs across the combined capitals and all cities, apart from Canberra houses and Darwin and Hobart unit rents at the end of 2023, but extreme rent hikes are losing traction as rental gains continue to slow across most of the capital cities.
Dr Nicola Powell, Domain’s Chief of Research and Economics
“Some good news for renters at the start of the new year – 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.
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,” said.
“Looking ahead, several factors are slowing rental growth — stretched affordability, more renters opting for house shares, and a slow return of investors over 2023.
They will continue to play out in 2024.
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.
We forecast a tipping point to be reached at some stage this year, making a return to a more balanced rental market.
To help alleviate Australia’s housing crisis long term, further solutions need to be activated, such as Build-to-Rent.
It provides a significant amount of rental housing supply at scale and speed.
With the cost of home ownership becoming more and more expensive in major cosmopolitan cities, it can act as a key circuit breaker for housing affordability,” said Powell.
House rents, quarterly and annual changes
Unit rents, quarterly and annual changes
House and unit combined rental vacancy rates
Looking across the capital cities
Here’s a State by State breakdown from the Domain December 2023 Rental Report
Sydney – Steady unit rents for the first time in 2.5 years
- While it may have been another quarter of record rents for Sydney – firming the city’s status as the most expensive in which to rent – a clear slowdown in rental growth has become increasingly evident.
- House asking rents rose for the fourth consecutive quarter to reach a record of $730 per week. However, there was a deacceleration in growth for the second quarter in a row, rising at half the pace of the previous quarter. The continual rise has provided the longest stretch of annual increases on record (3.5 years), and while still double-digit, they have eased from the mid-2022 peak gains.
- Sydney unit rents turned a corner over the December quarter to hold steady for the first time in two-and-a-half years at $680 per week. This breaks the longest stretch of rising asking rents in the city’s history, following the previous nine quarters of consecutive growth. Annual gains have also lost momentum now at the slowest rate of increase since September 2022. The steady outcome of unit rents has further widened the price gap between property types for the second consecutive quarter but is still low relative to the past three years.
- Sydney’s vacancy rate has jumped to a 12-month high of 3%.
Melbourne – Rents are steady for the first time in just over two years
- Melbourne’s rental market turned a corner over the December quarter, with 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.
- Melbourne’s vacancy rate has jumped to a 12-month high of 2%.
- While the rise in the number of properties for rent is expected during the busy changeover period, it is set to be the city’s most competitive one as the vacancy rate is at its lowest for the month of December.
Brisbane – It is the longest stretch of rising unit rents ever seen in the city
- Brisbane house rents rose to another record high over the December quarter, to reach $600 per week.
- Brisbane 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.
- Brisbane’s vacancy rate is 9%, lifting slightly from February’s record low (0.6%).
Adelaide – House rental gains slow to a 3.5-year low
- 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.
- Adelaide unit rents held steady over the quarter for the first time in a year at a record high of $450 per week. Adelaide is currently the most affordable city to rent a unit (jointly with Hobart) in Australia.
- Adelaide’s vacancy rate is currently at 4%, remaining close to the record low of 0.2%.
Canberra – Rents rise for the first time in a year
- 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.
- Canberra’s vacancy rate reached a high of 2% in December.
Perth – Its longest stretch of rising rents
- 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.
- Perth’s vacancy rate lifted marginally to 4% from a record low of 0.3% in November.
Hobart – The first annual decline in unit rents in a decade
- Hobart house rents returned to the record high of $550 per week, last seen in March 2023. Unit rents flatlined for the second quarter in a row, remaining $25 lower than the record high and providing the most stable conditions in more than five years.
- Hobart’s vacancy rate is currently 8% – the highest vacancy rate for the month of December.
Darwin – Rental choice has risen substantially
- Darwin’s median house rents remained steady for a third consecutive quarter, at the record first achieved in 2012. Unit rents rose over the quarter to their highest since 2014, at $540, only $10 below the previous record.
- Darwin’s vacancy rate jumped to 1.7% in December.
To read the complete Domain Rent Report, December Quarter 2023, please visit here.
