Apartment rentals soar in regions: CoreLogic

Across the capital city markets, each city posted a rise in rents over the December quarter for both houses and units

Apartment rentals soar in regions: CoreLogic
Apartment rentals soar in regions: CoreLogic

Regional rents continued to outpace capital city rents over the fourth quarter of 2021 with regional dwellings rising 2.5% against the 1.6% rise in capital city rents, taking the annual regional rental growth rate to 12.1%. 

Over a 10-year period regional house rents have increased 33.2% compared to 24.9% growth across the combined capitals. 

The regional unit market has seen rents increase 41.4% in the past decade compared to capital city figures of 14.4%. 

Despite worsening affordability, houses continued to outperform unit rents over the December quarter, according to CoreLogic’s quarterly Rental Review.

The national rental index increased 1.9% during the December quarter, a repeat of the September quarter.

CoreLogic’s research director Tim Lawless said rents were under extraordinary pressure from many factors.

Lawless said the stronger rental conditions across the regional markets is a story involving both demand as well as supply, following a surge in regional population growth through the pandemic, especially across regional Victoria and regional NSW.

“While demand has risen we generally haven’t seen much of a supply response. Australia’s rental market is mostly reliant on private sector investors to provide rental housing,” he says.

“Investors as a proportion of total mortgage demand moved through record lows in early 2021, highlighting relatively low levels of investment activity across the country and also implying relatively low levels of new rental stock coming onto the market. 

“Arguably the regions have less elasticity in rental markets, meaning, when demand rises, supply is less responsive than capital cities where investors are generally more active.”

Brisbane was the strongest performing rental market amongst the capitals over the quarter, rising 2.3%, followed by Canberra and Hobart, both rising 2.1%. 

Despite recording the strongest annual rental growth (15.2%), the Darwin rental market was the worst performing over the quarter, with rents rising 0.6% over the three months to December.

Canberra remains the most expensive capital city rental market, with typical dwellings renting for $651 per week, followed by Sydney ($604p/w), Darwin ($561p/w), Hobart ($521p/w) and Brisbane ($507p/w). 

Adelaide remains Australia’s most affordable capital with a median dwelling rent of $447 per week, followed by Melbourne at $456 per week.

Each capital city market posted a rise in rents over the December quarter for both houses and units. 

Brisbane recorded the strongest quarterly increase in house rents of 2.7%, taking annual growth rates to 10.6%. 

Darwin house rents increased 0.6% during the quarter, however its growth in rents during the first half of 2021 resulted in the highest annual house growth figures of any capital at 15.0%.

"As arguably the most COVID-impacted unit market in Australia, Melbourne’s rental growth trends shifted in December, as units recorded the strongest rental growth in the country, up 1.6%," Lawless said.

Melbourne’s rents remain 5.5% below the record highs of July 2019, however any recent momentum in unit rental growth could represent a recovery trend, underpinned by affordability constraints.

“Brisbane’s rental market for houses has shown strength throughout the pandemic as demand outweighed supply, while Melbourne’s unit market has been weak through most of the pandemic to date due to low demand against relatively high vacancy rates,” Mr Lawless says.

“Melbourne’s unit market is now benefitting from higher demand as more domestic renters seek out affordable housing options in the unit sector. 

"Demand for Melbourne unit rentals is likely to increase more sharply as foreign students and international visitors return.”

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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