Australian tenants have on average forked out an additional $2,727 to pay rent in the past year as stubbornly high prices and record low supply continue to bite.
Rents increased by 2.5% nationally in the latest quarter, CoreLogic’s latest review has found, amounting to approximately 10% in the past year.
CoreLogic economist and the review’s author, Kaytlin Ezzy, said the annual growth rate equated to tenants spending an extra $52 a week on rent, or an additional $2,727 a year.
She said a chronic shortage in supply was continuing to push rental prices up across the country, with the pinch felt most acutely in urban areas.
Sydney has overtaken Canberra as the most expensive capital to rent in Australia, with an average price of just under $700 a week.
Unit rental values jumped by more than 5% in Sydney in the latest quarter, while Melbourne units were hit with an increase of just over 4%.
Nationally, units jumped by about 4% over the quarter, while houses jumped by 2%.
“The uptick in rental growth can be attributed to surging rents in the unit market, particularly across the largest capitals, with increased demand from overseas migration occurring amid a shortage of rental supply pushing rents higher,” Ezzy said.
Demand continues to outpace the rate of rental growth, with vacancy rates tightening to a record low of 1% in February before modestly increasing to 1.1%.
In the four weeks to 2 April, the total count of national rental listings fell to just under 95,000 – more than 35% below the previous five-year average.
“The re-acceleration of Australia’s rental market won’t be welcome news for those tenants already struggling to find affordable accommodation in our capital cities,” Ezzy said.
“There’s already a chronic undersupply of advertised rental stock in many parts of the country that’s translated into record low vacancy rates across most capitals.
“Such a low number of available rentals is a key factor that pushed rental values higher again last quarter.”
Rents in capital cities rose at more than twice the pace of regional areas in the latest quarter, continuing a trend since June last year – partly due to the return of overseas migration.
The largest quarterly rental increases were in Melbourne (3.7%), followed by Perth (3.6%) and Sydney (3.4%).
Only Darwin and Canberra experienced minor falls in rents over the quarter (-1% and -0.7%).
Despite the jump, Melbourne remained the most affordable capital with median rents of $526 a week.
“Weaker rental demand due to extended lockdowns and closed international borders saw Melbourne’s relative rental affordability improve through the first two years of Covid,” Ezzy said.
“However, since overseas migrants and international students had returned and they typically choose to rent in Melbourne or Sydney, the pendulum had swung the other way.”
Ezzy said it was unlikely there would be relief for renters in the short to medium term without a significant increase in stock levels or financial incentive for investors to enter the market.
“Net migration is forecast to remain strong for some time yet and this will only add further upwards pressure on rental values,” she said.
“Tenants coming up against affordability constraints have limited opportunities and unlike homeowners can’t borrow to pay rent.
“It’s likely some tenants are now sacrificing the spare room or home office and re-forming share houses that disbanded throughout Covid in order to share the rental burden.”
