Australia’s property market is hard enough to enter as a buyer, but now new research shows that renting isn’t a great solution either.
A quarterly report released by property analysis firm CoreLogic on Wednesday found that rental prices are the worst they’ve been in 13 years. National rental rates are 8.9% higher compared to this time last year, which is the highest annual growth Australia has experienced since July 2008.
Brisbane is the worst capital city to rent in, experiencing the strongest growth in average rent at 2.6%, followed by Sydney at 2.3%. Fuelled by low vacancy rates, interstate migration and skyrocketing property prices, median weekly asking rents rose by $10 in three months to $460 for houses and $410 for units. House rents in some hot spots, such as Brisbane west, climbed by almost 8 per cent to $550. It’s the fifth consecutive quarter in which house rents have risen across the sunshine state capital, according to the latest Domain Rent Report, released on Thursday. It’s also the first time in a year that rents for units have increased faster than for houses as the drought for affordable housing close to the city centre worsens.
However, it’s not just big cities struggling under the pressure of increased demand and a shortage of stock. Regional rental markets have been pummeled, rising 2.2% over the September quarter compared to capital city dwelling rents. Australia’s regions had the highest annual rental growth rate ever recorded since CoreLogic started measuring rental indexes in 2005, at 12.5% as of this September. In comparison, the combined capital cities recorded a yearly rent growth of 7.5% – the biggest jump for the combined capitals since January 2009, but still not as high as the regional areas.
CoreLogic’s research director Tim Lawless warned that regional renters were feeling the sting of demand which was upping prices.
“Demographic data is showing a clear trend towards regional population growth, driven by a combination of more people leaving cities for the regions, but also fewer people moving from the regional areas to the capitals,” he said. “With regional housing rents rising 12.5 per cent over the past year at a time when household incomes have hardly budged, it’s likely that rental affordability is becoming a lot more challenging in some of the most popular regional markets.”
Well… based on how the market has been performing so far it’s likely that will see high double-digit Brisbane house price growth in 2021, with most segments exhibiting strong price appreciation. And despite Covid-19 related challenges, buyers and sellers are still transacting, as Brisbane property values:
And there is still plenty of growth left, as Brisbane property is still very affordable compared to the other east coast capital cities.
While the figures paint a compelling portrait for landlords and investors, it is a bit of grim outlook for some of the city’s already struggling tenants who are being forced to move further out and into shared living in a trend that could strengthen once borders reopen, experts say.
What do you think will happen over the next few months in the Queensland rental market? What about the Australian rental market? Let us know in the comments below.