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While rental growth in the higher priced capital cities has slowed, regional markets have reported significantly higher demand and tighter supply, according to a new report.
PropTrack’s latest rental report for the September 2024 quarter has revealed that national median rents increased by 7 per cent over the year to $610 per week in September.
Growth in September of this year has risen to half of the rate of the 14 per cent growth recorded in the year to September 2023, and also marks the slowest annual growth since September 2021.
Even with annual rent growth declining in September, REA Group director of economic research, Cameron Kusher, said that “annual rent growth of advertised rents still outpaced inflation, making it difficult for renters to afford properties”.
The report highlighted that the combined capital cites’ median rent was $640 per week in September, reflecting a 1.6 per cent increase over the quarter and a 6.8 per cent rise over the year.
Notably, regional rents grew at a more pronounced rate to $540 per week in September, having increased 1.9 per cent from June and 8 per cent since September 2023.
Figures around rental supply further illustrated the divergence between the capital cities and regional markets, with rental supply for new and total listings up annually by 11.9 per cent and 14.6 per cent respectively across the capital cities.
Contrastingly, supply tightened in the regional markets, with new and total listings declining 0.4 per cent and 1.2 per cent respectively over the year to September.
The report observed that the average number of enquiries per listing nationally fell 11.7 per cent to 22 enquiries over the year to September, with the regional markets climbing annually by 20.2 per cent to 19.2 inquiries, and falling 19.1 per cent across the capital cities to 23 enquiries.
Weighing in on these findings, Kusher explained that tenants have widely begun moving to “less desirable” locations in order to reduce costs, resulting in the more affordable regional rental markets seeing “stronger rental growth, lower supply and higher demand” compared to the higher priced inner-city markets.
The report also observed that the high cost of renting appears to have driven more first home buyers (FHBs) and investors to enter the market, with the number of FHB loans over the year to August 2024 rising 8.9 per cent, and the annual number of loans to investors increasing 16.8 per cent.
Kusher echoed this sentiment, noting that the “challenging rental conditions have also likely encouraged more renters with the means” to exit the rental market and purchase their own property. However, the economist emphasised that this option is “not possible for a large cohort of renters”.
Looking towards the future, the director highlighted the slowing of rental growth and increases to supply in stating that “the market appears to be beginning the transition from one that was strongly in favour of landlords towards more balanced conditions”.
“Even so, the market remains much tighter compared to prior to the pandemic and we expect rents to maintain an upward trend and supply to remain low on an historic basis,” Kusher said.
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