Why rents in Australia are expected to keep rising
It’s a question on many Aussies minds: will rents keep rising? Australia's rental market continues to see rents surge in major cities and indications point towards a continued upward trend throughout 2024.
Rising Rents: A Yearly Snapshot
Data collected between the December quarters of 2022 and 2023 by realestate.com.au reveals the rental market's momentum. The median rent experienced an impressive 11.5% surge during this period, reflecting a widespread trend in most capital cities.
Significant increases were observed in Perth (20.0%), Melbourne (18.3%), Sydney (16.7%), and Adelaide (12.5%). Brisbane and Darwin also experienced upticks at 9.1% and 1.7%, respectively. However, Canberra recorded a stagnant 0.0%, while Hobart faced a decline of -4.8%.
Decreasing Vacancy Rates
Simultaneously, the vacancy rate saw a decline from 1.3% to a mere 1.1%. This reduction in available rental properties aligns with the growing demand for accommodation, creating potential opportunities for property investors.
Cameron Kusher, the Director of Economic Research at PropTrack, describes the current scenario as “tough rental market conditions,” forecasting a continuation of the challenging landscape for renters.
The Dynamics at Play
The combination of a persistent tight supply and robust demand is driving the escalating rents. According to Kusher, increased lending to investors throughout 2023 is a key contributing factor. While investors are gradually returning to the housing market, a considerable number are opting to sell, resulting in a limited pool of rental properties.
Kusher emphasizes the impact of Australia's rapidly growing population, stating, “The rapid increase in Australia’s population exacerbated rental market challenges, as most people migrating to Australia become renters.”
Strategic Considerations for Property Investors
