A new report showed Australia’s capital cities have recorded the strongest annual rental increase in history, fueled by a surge in overseas migrants and international students as well as a significant shortfall in rental listings.
CoreLogic’s latest report showed rents in capital cities have risen on average by 11.7 per cent in the past year, marking the highest annual gain since the property research firm began recording data in 2007.
This surge in rental prices translates to an average increase of around $63 per week, or $3,200 annually in rent.
Notably, the figures are significantly higher than the average year-on-year increase of 3.5 per cent underscoring the magnitude of the current housing crisis gripping the country.
In the past three months alone, average rent in capital cities increased by 2.8 per cent, while a 0.8 per cent gain was recorded in April.
Each capital city excluding Darwin and Canberra recorded a rise in dwelling rental values in April, as the average weekly prices in the Northern Territory and ACT capitals fell by 0.3 per cent to $587 and 0.2 per cent to $677, respectively.
Sydney retains its title as the most expensive capital city in Australia for tenants, with the average weekly rent at $711. In the past month alone, rental costs in the harbour city have surged by 1.3 per cent, while the year-on-year increase stands at 13.1 per cent.
Meanwhile, Melbourne, with an average weekly rent of $535, has lost its title as the most affordable capital city to Adelaide, where renters pay an average of $534 per week.
According to the report, the persistent “mismatch” between the demand and supply of rental property continues to force rents higher.
Data showed the total supply of rental listings in capital cities was 20.9 per cent lower in April compared to the same time last year and 39.8 per cent below the five-year average.
With the exception of Hobart and Canberra, vacancy rates across the capitals also remained near record lows and well below the 3 per cent to 5 per cent average rate considered to be a balanced rental market.
The report also highlighted that the strong rental gains in the past year were also largely underpinned by increasing demand for capital city units.
Sydney and Melbourne continue to record the strongest growth in unit rents across the capitals, with both cities seeing new peak rates of growth. Sydney’s unit rents increased 19.1 per cent over the past year, while Melbourne’s increased 15.2 per cent.
The report also said a rise in migration and the return of international students had led to increased demand for rental listings.
“Given that the flow of new unit approvals has held below average since 2018, the rental market will likely continue to have supply issues over the medium to long term,” the report said.
CoreLogic economist Kaytlin Ezzy noted “unlikely” that there will be much in the way of relief for tenants in the short to medium term, as demand continues to outstrip supply.
“With approvals holding so low, it’s likely we’ll see a shortage start to accumulate in those medium- to high-density rental properties moving forward.”