Australian rental market growing at fastest rate since 2007 as Sydney stages recovery

Inner west rental boom

Strong rental demand has seen rents grow at their fastest rate since 2007 across Australia. (AAP Image / Angelo Velardo)

Rents are increasing at their fastest rate across the country in close to 15 years as the rental market soars off strong demand for property in regional centres.

CoreLogic’s Rental Review for the March 2021 quarter revealed a surge in national rental rates of 3.2 per cent — the largest increase recorded since May 2007.

Across the combined regional markets, rents rose 4.1 per cent in the first quarter of 2021, while rents in the combined capitals increased 2.9 per cent.

Darwin and Hobart were the top performing rental markets in Australia, with rents soaring 7.7 per cent and 6.1 per cent respectively in the quarter, while Melbourne had the weakest market with rental values increasing just 1 per cent.

CoreLogic research director Tim Lawless said the national rental market was tale of two cities at the moment.

“At one end of the spectrum we have Perth and Darwin where annual rental growth is well into double digits and accelerating, and at the other end is Melbourne and Sydney where rents are down over the year,” he said.

The days of tenants ruling the roost appear to be over in Sydney with data showing Australia’s largest city has staged a near complete COVID-19 recovery to be just 0.2 per cent down from a year ago.

Sydney’s current median asking rent is $570 per week — a 0.6 per cent increase in the month and a 2.8 per cent increase in the quarter.

Mr Lawless said the apartment market had held Sydney back from seeing similar growth levels seen in other Australian cities.

“The annual decline in rents across Australia’s two largest cities is attributable to falling rents in the unit sector, where closed international borders have created a demand shock in a market that was already challenged by high supply,” he said.

Houses in Sydney saw a 3 per cent jump in the median rental price in the past 12 months to $631 per week, while apartment prices fell 4.9 per cent over the same period. Unit rent prices increased 2.4 per cent in March to $511 per week.

Mr Lawless said while rents are rising across the country, housing values continue to grow at a faster rate, which has seen rental yields compress across most of the capital cities.

Vacant Apartment

Apartments have held the Sydney and Melbourne rental market back. Photo: Adam Yip

“The exceptions are Perth and Darwin where rents have risen at a faster pace than housing values, driving a rise in yields,” he said.

The opposite is true in Sydney and Melbourne where rental yields have fallen to record lows of 2.74 per cent and 2.92 per cent respectively.

“Outside of Sydney and Melbourne, with mortgage rates so low, yields are generally high enough to provide investors with positive cash flow opportunities from the outset,” Mr Lawless said.

Brisbane recorded a 3 per cent jump in rents this past quarter, while Adelaide increased 2.9 per cent and Canberra grew by 2.6 per cent.

In the past 12 months, Darwin has seen rental values rise 16.5 per cent, followed by Perth at 14.2 per cent and Canberra at 5.1 per cent.

Source Matt Bell 27 Apr 2021 Daily telegraph

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