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Why rent prices could continue to rise

05 December 2022

Multiple Australian cities are seeing the strongest annual growth in rent on record, and it's not predicted to slow down anytime soon.


Over the last quarter we've continued to see rents increase. What we've seen though is a bit of a slowdown in rental growth across the regional markets and a bit of a pickup in the capital city rental markets as more people move back to the capital cities and migration to Australia ramps up.

Probably the most noticeable thing is the strong increase in rents in units in Sydney and Melbourne, with Sydney unit rents up four percent for the quarter and Melbourne unit rents up five percent for the quarter. Over the last 12 months house rents nationally have risen by 11.1 percent and unit rents are up by 7.1 percent.

In a number of capital cities we're now seeing the strongest annual rental growth on record. That includes Sydney, Melbourne, Brisbane and Adelaide. Unfortunately for renters, we're still not seeing any significant increase in the supply of properties for rent. The number of new listings in September was down 7.1 percent from the same time last year and it's already very low.

Total rental listings nationally we're down 20.5 percent from where they were 12 months ago and in most capital cities and rest of states we're seeing a significant reduction in rental supply, right at the time that migration to Australia is picking up and we desperately need more rental stock. With no obvious signs of a pickup in rental supply it looks like rents, particularly in capital cities where most people are migrating to, are going to lift quite significantly over the coming quarters.

Rental days on site has fallen to 19 days and that's the lowest on record. It has been bouncing around 19 and 20 days most months for the last six months or so. Compared to a year ago properties were renting after 22 days. So you can see things have really tightened up quite significantly and we've seen big year-on-year falls in rental days on site in Sydney and Melbourne.

Effectively this highlights that there's no rental vacancy because most people will advertise when they're notified that the tenant is leaving and they're going to find a new tenant for that property long before the property is ever vacant, so it's very difficult for people who are looking for rentals at the at the moment because there's so much more competition, supply is so tight and properties are being snapped up very quickly.

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