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For the first time in years, quarterly rent prices have fallen in several Australian capital cities.
New data from Domain has revealed that rental price growth in six Australian cities – Sydney, Melbourne, Brisbane, Adelaide, Canberra and Perth – has weakened over the June quarter.
In most major cities, rents are either declining, increasing at a more modest rate, or have frozen altogether.
The June 2024 quarter was the weakest quarter for house rents since 2021 for Sydney and Melbourne; and since 2020 for Brisbane, Adelaide and Perth.
Meanwhile, unit rental growth is at its lowest since 2021 for Sydney, Melbourne and Brisbane; since 2020 for Canberra; and since 2018 for Perth.
While this news may appear alarming for rental owners, Domain’s chief of research and economics Dr Nicola Powell stressed that this slowing growth trajectory is a sign of a healthy, normalising rental market.
“We recognise the challenges renters have been facing, so it’s encouraging to observe our latest data showing easing rental conditions. Looking ahead, Australia’s rental market will continue to be more balanced,” Powell said.
According to Powell, the biggest contributing factor behind the slowdown of rental prices is a gradual reduction in demand.
Growing first home buyer schemes are allowing more renters to transition into home ownership, taking pressure off the rental market.
“Increased first home ownership is imminent, supported by initiatives like Queensland’s doubled first home buyer grant, the federal Help to Buy shared equity scheme, and revised stamp duty concessions in ACT, South Australia, Western Australia and Queensland.”
“These measures aim to facilitate home ownership transitions and improve affordability, further alleviating rental conditions in Australia,” Powell explained.
Declining overseas migration is also helping ease rental demand, with Domain reporting that “the number of prospective tenants per rental listing has consistently fallen throughout 2024”.
As fewer renters seek out properties, rental availability is beginning to ease, paving the way towards a “rebalancing of supply and demand pressures” in the future.
As a result, rental prices – while still elevated – are not rising as steeply as before.
In Adelaide, rental growth for freestanding houses is currently seven times slower than the previous quarter, with rents rising just 0.8 per cent in the past three months.
Meanwhile, unit rents across all eight capital cities rose half as quickly over the June quarter compared to the quarter before, bringing the total increase to 1.6 per cent – or just under $10.
