Tight conditions driven by low supply and higher demand as household sizes shrink
Residential rents have hit record highs as vacancy rates across Australia continue to plummet, according to new data from CoreLogic.
CoreLogic’s Quarterly Rental Review for Q2 2022, released Tuesday, shows that the national rental index rose 0.9% in the month to June and 2.9% over the June quarter, a 30-basis-point increase over the three months to March.
Dwelling rents are 9.1% higher across the capital cities and up 10.8% in regional areas from June 2021.
CoreLogic research analyst and report author Kaytlin Ezzy said the recent spike in rents has occurred mostly in the absence of overseas migration. Ezzy said the rental conditions were driven by a combination of low supply and higher demand due to shrinking household sizes.
“This sustained period of strong rental growth has seen national dwellings record the highest annual growth in rental values since December 2008, when rental demand was supported by record levels of international migration,” Ezzy said. “However, the current surge in rental demand has occurred largely in the absence of overseas migration and has instead been driven by factors including low supply and a decrease in the average household size, which has amplified domestic rental demand over the COVID period to date.”
National vacancy rates fell to a record low of 1.2%, down from 2.2% this time last year. The drop was led by falls in available rental properties in all cities except Canberra, where vacancies rose slightly to 1.1%.
Ezzy said the shortage of rental supply has put considerable pressure on the market, with rental listings in June 34% below Australia’s long-term average for this time of year.
Capital city rents spiked 3% in the three months to June, outpacing regional rents, which rose 2.7% over the same period.
Quarterly growth in unit rents outpaced growth in house rents across both the combined capitals, with units up 3.5% and houses up 2.7%, and the combined regional markets, with units up 3.2% and houses up 2.6%.
