It’s common knowledge that the East coast of Australia is the most expensive to live on. This is mostly due to the fact that everyone wants to live in Sydney, Melbourne, Brisbane and Canberra, due to the fact that these cities are employment hubs and close to friends and family already located there. However, you might be surprised by how much more you’re paying than your friends in the west.
According to Domain’s rental report for the December quarter, Sydney and Canberra have the highest rental prices in the country. In a turn of events that will surprise exactly no one, Sydney was the most expensive place to rent an apartment despite a 1.9% decrease last quarter. Canberra, which cleanly took second place, saw apartment rents increase by 2.1%, while Perth lagged quite a bit, with now growth at all.
Even with the price decrease, rent for a Sydney apartment averages $510 per week, while houses will put you back $525. In Canberra, apartments rent for $480/week, while rent for houses went up by 5.5%, increasing to $580. This means that Canberra has become the most expensive place in the country to rent a house. Following in their stead, the other two major east coast cities — Brisbane and Melbourne — saw apartment rents increase to $385 (up 1.3%) and remain at $420 (steady from the last quarter) respectively. House rental prices increased by 1.2% in Brisbane to $410, while Melbourne showed no movement, with house rental prices still at $430.
For the cities not on the east coast, rents varied quite a bit. Darwin apartment rents grew 2.6% to $390, Hobart by 3.8% to $410, Adelaide by 1.6% to $315 and Perth showed no growth in apartment rental prices, remaining at $310. Houses showed a similar story, with Hobart up 2.2% to $460, Adelaide increasing 1.3% over the quarter to $390, and Perth remaining steady at $370.
To put this into perspective, apartment renters in Sydney are paying $10,400 more than Perth residents are. This is a massive amount of money, especially when you take into account the generally higher cost of other basics like water, electricity and food in Sydney as well.
Rental yields told a different story and were up across all Australian capital cities, with the exception of units in Hobart which went up in value by 50 per cent in the past three years.
In 2019, yields were up by an average of 3.6 per cent on houses and 3.4 per cent on for units but quarter-on-quarter basis results proved to be a mixed bag up with no change for houses and units were only only 0.2 per cent.
Domain economist Trent Wiltshire said even though Sydney was still expensive it was good news for renters in the area but not for long: “new apartment construction has pushed rents down and contributed to the vacancy rate rising over the past 12 months. But rents are likely to start rising in 2020,” he said.
“Sydney remains the most expensive capital city to rent a typical unit but Canberra is catching up.”
Melbourne’s apparent stagnation in rental prices is interesting, considering the fact that apartment prices in the city have increased by quite a lot over the past three years — 11% in some areas. This is a massive leap considering the city’s apartment construction boom has also occurred during this time. The increase in apartment prices is primarily linked to the strong population growth Melbourne is experiencing, which may push rental prices up further in the future.
In Brisbane, the rental market looked to be slowly tightening with a rise across both houses and units. House and unit rents both increased by $5 in the December quarter, while the vacancy rate fell slightly over the past year.
Strong growth in rents in Canberra occurred despite an apartment construction boom, but can mainly be put down to population growth. However, this hasn’t helped potential tenants find a place to rent. Canberra remains one of the most hotly contested rental markets in Australia, with some people putting in over 25 applications before receiving good news.
With all of this in mind, it’s definitely shaping up to be an interesting year for renters and investors alike.