Rents have hit record highs across Australia’s capital cities, with both house and unit rentals up 12% in the past year alone, data released by Domain reveals.
The annual increase is the largest in 14 years, making it very much a landlord’s market, Domain chief of economics and research Dr Nicola Powell told Guardian Australia.
Much of the growth has been driven in unit rentals, she said.
“What we’re seeing is affordability constraints impact tenants, and it is steering demand to units due to the affordability constraints of a house rental,” she said, adding the reopening of the borders and return of international students was also taking up some supply.
According to Domain’s quarterly rent report, unit rents in Sydney are set to hit a record high next quarter, after reaching an average of $525 per week in the June quarter, up 11.7% annually. House rents increased 3.3% over the quarter to $620 per week.
While Melbourne remains the most affordable city to rent houses, unit rents surged 5.1% over the quarter to $410 per week.
“Some tenants could afford to live on their own so it created this shift, and Melbourne’s rental market has been an interesting one because it’s been quite diverse, Powell said.
“We’ve seen tight rental markets in the outer areas, we’ve seen better conditions in the inner areas of Melbourne, but that is slowly changing. And we are seeing a recovery sweep across Melbourne.”
Nationally the vacancy rate is stable at 1% but anything less than 2% means it is still a very competitive market for rentals, Powell said. It was worst in Adelaide, where the vacancy rate is 0.3%. In Hobart it is 0.5% amid slowing rental growth.
Brisbane is in its eighth quarter of rising house rents, up to $520, versus $450 for units. Perth houses are at a nine-year record high at $495, while units reached an eight-year high at $400 per week.
Canberra houses sit at $690 per week, while units are $550 per week. In Darwin, it is $600 per week for homes, and $480 for units.
“In all of our cities, our tenants are experiencing tight conditions. All of our cities have a vacancy rate that deems it a landlord’s market,” she said.
“While we’ve overall got the pace of rental price growth slowing, they’re still rising,” Powell said.
