Rent rises slowing down, but low vacancies to push prices higher in 2023

Young woman carrying boxes into her new rental.

Following a period of record-breaking growth, Australian rental prices finally slowed over the December quarter. But any relief renters feel may be short lived as rock-bottom vacancy rates and high costs of living tilt the playing field against them.

According to data released this week by PropTrack, advertised rental prices remained unchanged in the final three months of the year, with the median asking rent across all dwellings currently sitting at $480.

In capital cities, rents rose by 1% over the quarter to be 10% higher year-on-year — welcome news for property investors who bought during the boom and are now facing higher mortgage repayments. Regional rents, which remained stable over the quarter, ended the year up 7.1%.

This is the first time since the September 2020 quarter that rents in capital cities have outpaced those in regional areas, suggesting the intrastate migration trend which accelerated over the pandemic period has begun to wane. 

PropTrack director of economic research Cameron Kusher said mixed outcomes like these will be a feature of the rental market this year, with moderation in prices expected in some areas but not in others. 

“Demand for rental stock remains heightened and supply continues to be limited, however rental vacancy rates have steadied over recent months,” he said.

“We expect rental prices will continue to grow in the capital cities over the coming months, while the prospects for further rental price growth regionally appear to be easing.”

 

Sydney (+1.8%) and Melbourne (+2.3%) were the only markets that saw rents go up over the quarter. The ACT (-0.8%) and Perth (-3.2%) both recorded dips while rents in other capital cities remained stable.

CoreLogic data released this month also showed a slowdown in the pace of rental growth. But CoreLogic head of research Eliza Owen said it comes amid a 22% lift in rent values since September 2020.

“It is not entirely clear whether the rental market will continue inching toward a turning point, or if this is a temporary, seasonal reprieve due to higher new listings through December,” she said.

Since the start of the upswing, the median weekly rent valuation rose from $430 per week to $519 per week — the largest increase on record since CoreLogic began tracking rental data almost 18 years ago.

RELATED: How high will Australian interest rates go in 2023?

Owen said rental vacancies crept up slightly in December, with new advertised listings undergoing a seasonal peak in the four weeks to 11 December 2022. 

“Through this period, 50,867 new advertised rental listings were counted by CoreLogic, which is the highest volume observed since mid-February, another seasonal high point,” she said.

“However, it’s important to recognise despite the increase in rental listings, the figures remain -13.8% lower than the previous five-year average for this time of year.”

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