House and unit rents rise as lockdown restrictions ease

Renter looks out window of apartment, considering rising rental prices.

While the gradual easing of Covid restrictions is welcome news for many, it might pose a problem for renters’ budgets.

Domain’s latest rental report recorded year-on-year and quarterly rental increases across the majority of capital cities for tenants renting houses, with unit prices also rising in the last quarter after dropping off during the pandemic.

Out of the capitals, Darwin saw the most significant yearly increase for renting houses (25.3%) and units (20.5%), with average prices sitting at $620 and $470 per-week respectively for the September quarter.

That pushes the average Darwin house rental price above Sydney’s record-high $580 mark, and is just shy of the harbour city’s weekly $485 average unit rental. These rising prices have been attributed to the pandemic property boom enticing many landlords to sell in cities like Darwin and regional areas that have become more attractive during lockdowns, leading to heightened renter competition.

But as lockdowns slowly ease, the rental market is also climbing once again in metropolitan areas where rental price drops and stagnation previously reigned as tenants left for lifestyle or income reasons. According to Domain, six out of the eight capitals saw quarterly unit rental increases (Perth, Adelaide and Hobart held steady).

Sydney’s unit rental price hike – the first increase in the area recorded by Domain in more than 18 months – could spell the end of negotiating rent reductions for city tenants. Those who became accustomed to more spacious house rentals should also be prepared for price and demand shifts as international borders reopen and investor interest peaks.

RELATED: Mozo’s 2021 Bank of Mum and Dad Report.

Which capital cities have the cheapest rent right now?

For the first time in Domain’s records, Melbourne is the most affordable capital to rent a house. There was little movement in the last quarter (while other cities saw notable increases), with prices hovering at a $430 weekly average in Victoria’s capital.

Similar to Sydney, average unit rents rose in Melbourne for the first time since the pandemic began and now sit at $370 a week – only to be beaten by Adelaide’s $350 unit price.

Capital cities
Average house rent (September quarter)Average unit rent (September quarter)
Melbourne$430 (lowest)$370
Adelaide$440$350 (lowest)
Sydney$580$485
Brisbane$460$410
Hobart$495$400
Darwin$620$470
Perth$450$380
Canberra$645 (highest)$520 (highest)

Should you increase rent as a landlord?

With rent prices once again on the move, many investment property owners may be considering raising their rental prices. While you want to make the most out of your investment, it’s important to consider a few things before you look to increase the rent on your property.

Firstly, are you actually able to do so? If you’ve organised a fixed-term lease with your tenants, you might not be able to increase the rent until the end of that period (unless it was otherwise written into the contract). Then, consider the market where your property is located and if it will be competitive to increase rent, or if doing so might cause reliable tenants to look elsewhere. 

And finally, remember increasing price trends may not continue. While Australia’s economic position is set to improve as business activity increases in line with vaccination rates, continued stability can’t be guaranteed. And in the same vein, many Australians may have altered financial priorities post-pandemic, with a ritzy apartment not necessarily being at the top of the list. 

Whatever decision you make, ensure it’s a measured, well-researched one – including how you manage your home loan. If you’re not satisfied with your current mortgage, check out some of the refinance home loan options below.

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