In Sydney, Melbourne, Brisbane, Perth, and Adelaide, annual growth is at multi-year lows, indicating that the period of rent increases may have peaked, according to Domain.
According to the research, investors are probably responding to the possibility of capital growth and trying to purchase before the Reserve Bank of Australia reduces the cash rate.
According to the research, investors are probably responding to the possibility of capital growth and trying to purchase before the Reserve Bank of Australia reduces the cash rate.
According to a recent survey, annual rent hikes for houses have reached multi-year lows in Sydney, Melbourne, Brisbane, Perth, and Adelaide, indicating that an unrelenting period of rising rents may have peaked.
Renters are still feeling the pressure from record high prices but the data in Domain’s Rent Report shows the lowest September quarter increase rate since 2019 for houses and 2020 for units.
“It seems like Australia’s period of rapid rental growth is coming to an end,” stated Nicola Powell, head of research at Domain.
After enduring the steepest and longest rental surge in history our latest [report] shows that all capital cities have passed their peak in growth rates and are now decelerating rapidly, with some cities already in decline.”
For rental houses, Sydney recorded its weakest growth rate for a September quarter in four years with annual gains at their lowest in almost three years. However, the average weekly rent was up marginally to sit at a record high $775.
Melbourne house rents marked the weakest outcome for a September quarter since 2021. But the report noted weekly rent remained at a record high of $580.
Rents in Brisbane declined for the first time in just over four years, marking the end of the city’s long growth period.
The number of potential tenants per rental ad on Domain’s website has dropped to its lowest level since 2019, suggesting a better balance between supply and demand, according to the research, which also indicated that rental demand is lessening.
The trend had been driven by a fall in demand as more individuals move into share housing and intergenerational living to reduce financial hardship, the survey added. It further stated that since its peak in March 2023, net overseas migration has dropped by 19%. Record rent growth occurred together with the migration peak.
Not every capital city offers hope for a brighter future. The September quarter in Darwin and Hobart was the best since 2020 and 2017, respectively.
Tenants were still having to deal with record-high asking rates in all capitals save Brisbane, Canberra, and Hobart, despite the apparent decrease in rental increases.
According to the research, all capital cities are still firmly landlord-friendly, with vacancy rates consistently falling below 2%.
Powell observed that things appeared to be shifting.
“For renters, this is long-overdue good news,” she stated.
“For the first time in nine months, quarterly rental growth for both houses and units has stalled across the combined capitals.
“Across the combined capitals, this has slowed yearly advances to a low of nearly three years, with most cities at multi-year lows.”
According to the research, one of the largest changes has been an increase in investment activity, which now accounts for 38% of new house loans—well above the average for the past ten year.
According to the research, investors are probably responding to the possibility of capital growth and trying to purchase before the Reserve Bank of Australia reduces the cash rate.
About The Author
