Rental rates increased by a record 10.0% in the year to September, following an identical rise in August, according to CoreLogic.
The sharp increase in demand corresponds with a significant reduction in supply, with the number of for-rent properties in September 35.4% below the previous five-year average.
And PropTrack economist Angus Moore has forecast that rents are likely to keep rising, as migration ramps up and demand for rental accommodation increases.
As he noted, Australian Bureau of Statistics data for August showed:
- Temporary visa arrivals exceeded 300,000 – for the first time since the pandemic began
- Student arrivals exceeded 40,000 – not far off the pre-pandemic levels of August 2019
Furthermore, while annual population growth has not yet reached the pre-pandemic level of 1.5%, the latest data show it has now increased for four consecutive quarters:
- March 2021 = 0.1%
- June 2021 = 0.1%
- September 2021 = 0.3%
- December 2021 = 0.5%
- March 2022 = 0.9%
“That increase in population will put upward pressure on rental demand amid already tight conditions,” Mr Moore said.
Demand is growing, but more supply may be on the way
Mr Moore said this is already showing up in rental price data.
“Rents are growing especially quickly in areas that recent migrants typically move to – these are mostly inner-city areas, often near major universities,” he said.
“Unsurprisingly, this pattern is the reverse of what we saw during the pandemic when borders were shut. During 2020 and 2021, inner-city areas had very weak rental markets and saw large declines in advertised rent prices, particularly in Sydney and Melbourne.”
Mr Moore said there were signs of investors returning to the market, which would increase rental supply and therefore reduce demand – but that this would be a slow process.
“The number of new investors relative to the size of the rental market is small,” he said.
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