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In its monthly unit update, research body CoreLogic revealed the trajectory that Australian rents are currently undertaking.
For a third consecutive month, CoreLogic’s national unit rental index rose 1.1 per cent as vacancy rates across the country continue to plummet.
Even with the pace of quarterly rental growth easing slightly from 3.7 per cent in the July quarter to the current 3.3 per cent rate, the pace of national unit rent growth is double that of house rents in every Australian region outside of regional South Australia and Hobart.
Despite this, CoreLogic economist Kaytlin Ezzy explained unit rents ($510) remained $50 lower on average as opposed to house rents ($561). She did note that “with the rate of growth in unit rents outperforming that of houses over the past year, the gap between house and unit rents has narrowed by around $10”.
“As the affordability benefit that unit rents offer diminishes, it’s possible we could see some rental demand shift back in favour of the lower-density sector,” she added.
Homing in on capital city markets, CoreLogic revealed the quarterly pace of rental growth across Australia’s major cities continues to trend downward. Brisbane recorded a 4.3 per cent rise in rents over the quarter, the equal highest rate but representative of a cooling from the 4.6 per cent experienced during the previous quarter.
Other significant movers include Darwin (3.5 per cent), Adelaide (3.3 per cent), and Melbourne (3.1 per cent), while slim growth was experienced in Hobart (0.5 per cent) and Canberra (0.2 per cent), although this was partly due to stronger growth trends seen over the beginning of COVID-19.
Sydney was the only capital where rental growth did not trend downward. The harbour city recorded a new cyclical peak growth rate of 4.3 per cent during the October quarter, induced by strong returns of overseas migration.
National gross rental yields for units climbed nine basis points during October to 2.4 per cent, a rate 58 basis points higher than the recorded lows during December 2021 (3.66 per cent). As a result of this, unit yields in all Australian capitals outside of Canberra and Adelaide — where they remain level — sit higher than levels reported this time last year.
Regional Western Australia boasts the largest gross rental yields of any national market at 8.89 per cent, while Sydney conversely possesses the lowest at 3.72 per cent.
Vacancy rates nationally sit at just below 1 per cent (0.99 per cent), with this figure rising slightly to 1.06 per cent for Australia’s combined regional areas and dipping to 0.97 per cent for the combined capitals.
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