Regional Rent Price Surge Biggest on Record

Australian rents have increased 8.9 per cent year-on-year during the past 12 months, the fastest pace of growth since 2008, while Darwin recorded price rises in excess of 20 per cent.

Regional rents experienced greater growth than their city counterparts in the September quarter, recording an average 2.2 per cent rise, while capital cities increased 1.7 per cent.

Darwin rents grew 20 per cent over the past 12 months, while Brisbane, Perth and Adelaide all recorded strong price growth.

Corelogic research director Tim Lawless said the strong demand for detached housing a lack of supply due to historically low levels of investor activity during the pandemic had driven rental prices higher.

“Renters are clearly looking for lower density housing options, with house rents rising at more than double the pace of units rents over the past year, however this trend is starting to narrow,” Lawless said.

Capital city rent prices

_{^Source: Corelogic Quarterly Rental Review}

Corelogic research director Tim Lawless said the strong demand for detached housing a lack of supply due to historically low levels of investor activity during the pandemic had driven rental prices higher.

“Renters are clearly looking for lower density housing options, with house rents rising at more than double the pace of units rents over the past year, however this trend is starting to narrow,” Lawless said.

“National house and unit rents [were] rising at the same rate over the September quarter at 1.9 per cent.”

“Another factor that may be contributing to rental demand is that more renters are working from home, which could be driving a trend towards smaller rental households as tenants look to maximise their space and working environment during Covid.”

Migration to regional areas has led to a boom in rent prices with regional rents rising 2.2 per cent over the September quarter and 12.5 per cent over the past 12 months, the highest increase ever recorded (since records began in 2005).

“Demographic data is showing a clear trend towards regional population growth, driven by a combination of more people leaving cities for the regions, but also fewer people moving from the regional areas to the capitals,” Lawless said.

“With regional housing rents rising 12.5 per cent over the past year at a time when household incomes have hardly budged, it’s likely that rental affordability is becoming a lot more challenging in some of the most popular regional markets.”

Adelaide remains Australia’s most affordable city to rent at $440 per week, while lockdown-ravaged Melbourne came in as the second most affordable with an average rent of $450 per week.

The skyrocketing value of properties against a backdrop of lower rent increases has led to a drop in gross yields from 3.77 per cent to 3.29 per cent in the past 12 months.

Darwin has the country’s highest gross rental yield at 6.17 per cent, followed by Perth at 4.33 per cent, Adelaide 4.06 per cent, Brisbane 3.93 per cent, Canberra 3.92 per cent and Hobart at 3.89 per cent.

Sydney (2.45 per cent) and Melbourne (2.76 per cent) have the lowest gross rental yields.

Although rental growth has eased quarter-on-quarter, Lawless said expected rents would rise nationally for the “foreseeable future” and rental affordability could become an issue.

“Data to March shows renters were spending an average of 28.7 per cent of their household income on rental payments, which is slightly above the decade average of 28.1 per cent,” he said.

“Rental affordability has deteriorated further from there, which is likely to see more renters looking towards higher density rental options where renting tends to be more affordable.”