Sydney Suburban Rent Prices Increase – Supply Decreases

Average rents have increased by more than AUD100 per week across 35 housing markets and 23 apartment markets nationwide in the past 12 months to August as housing rental supply tightened, data from CoreLogic shows.

Rose Bay in Sydney’s eastern suburbs had the highest weekly rental increase of AUD378, or 22.3% over the year, followed by Roseville Chase, Lindfield and Roseville on Sydney’s upper north shore with respective increases of AUD241, AUD221 and AUD211.

The national vacancy rate fell to 0.9%, the lowest in 16 years. But there are signs that the rapid pace of rent growth is slowing as affordability takes its toll on tenants.

Rental values for homes nationwide fell from 2.8 percent in the three months to May to 2.2 percent in the three months ended August, while average rent growth fell 0.1 percent to 3.6 percent over the same period.

Some smaller capitals and regional markets, which recorded stronger rental growth during the pandemic, have now shown a decline in rental growth.

Rents in Canberra decreased by 0.4% and decreased by 0.2% in Hobart. In regional Tasmania, rents decreased by 0.6%. Down 0.7% in NT, down 0.3% in SA and down 0.4% in Tasmania.

CoreLogic economist Kaytlin Ezzy said: “Rental affordability is likely to be a key factor impacting rental demand, with many landlords looking for more affordable rental alternatives as rents continue to rise.

“After strong rent increases through 2021, rental demand shifted to medium to high density areas as a more affordable alternative.”

Rentals increased in popularity during the year until August. Rents in the Gold Coast suburbs of Maudsland and Jacobs Well increased sharply, increasing by AUD 168 and AUD 154 a week respectively. In Adelaide, Glenelg South is up AUD150 a week and Glenelg East is AUD140.

In the apartment market, Docklands in inner Melbourne recorded the largest rent increase of $161 a week, or 35.1% over the past 12 months. Southbank’s rents increased $150 or 33.9% and West Melbourne’s increased $146 or 36.4%.

Nationally, apartment rents increased 11.3% over the past 12 months, the strongest annual growth on record.

Average apartment rents in Sydney, Melbourne, Brisbane and Adelaide also reached their highest levels on record, rising 11.6%, 12.9%, 10.7% and 12.2% respectively over the year.

Brisbane and Adelaide also posted record annual rent growth rates, up 14.1% and 12.2% respectively.

The short-term outlook for the rental market is unclear as various forces will influence the size – and number – of new households that need to be accommodated.

“Now that unit rents nationwide are recording their strongest annual growth on record, it is likely that some renters are looking to form larger households, reversing the trend seen during COVID, in an effort to spread higher rental costs across a larger rental base,” Ms. Ezzy said.

“At the same time, we have also seen a return of overseas migrants in recent months, particularly in Sydney and Melbourne, which is likely to offset reduced demand due to the current trend towards larger rental households.”

Quarterly growth in Sydney and Melbourne, which typically receive the majority of overseas migrants, held steady at cyclical highs of 4.1% and 3.9% respectively, while Brisbane recorded a new cyclical high of 4.6% in August.

“As vacancy rates are at record lows and rental demand remains strong in most capitals, it is likely that rents will continue to rise for some time yet,” Ms Ezzy said. “How high rent increases will be will only be limited by what prospective tenants are willing or able to pay, with rental affordability becoming a bigger factor influencing rental demand.”