Rental prices finished 2022 at a significantly higher level than they were the year prior, but rental price growth began to moderate during the December quarter, according to a new report from PropTrack.
Nationally, the median advertised rental price at the end of 2022 was $480, unchanged from the September quarter but up 6.7 per cent on 2021’s figure.
Rental market performance differed by location, with capital city rents rising one per cent over the quarter and 10 per cent over the year.
Sydney (up 1.8 per cent) and Melbourne (up 2.3 per cent) were the only markets in which rents rose over the quarter, while Perth (down 3.2 per cent) saw the largest fall of the capitals.
Regional rents remained unchanged for the quarter at $450 per week, though ended the year 7.1 per cent higher.
Rents dropped by one per cent in regional Queensland, 2.5 per cent in regional Tasmania and 7.2 per cent in regional NT.
It was the first time since 2020 that capital city markets had outpaced regional locations for rental growth.
Units outperformed houses for rental growth at a national level, with rents rising 2.2 per cent over the quarter while house rents remained unchanged.
“The moderation in rental price growth will be something to watch over the coming year,” PropTrack’s Director Economic Research Cameron Kusher said.
“Demand for rental stock remains heightened and supply continues to be limited, however rental vacancy rates have steadied over recent months.”
He predicted that the two-tiered performance of city and regional markets would continue in 2023.
“We expect rental prices will continue to grow in the capital cities over the coming months, while the prospects for further rental price growth regionally appear to be easing.”
Increase in rental listings: CoreLogic
Separate figures from CoreLogic also showed a slowdown in rental growth during the December quarter.
CoreLogic’s Quarterly Rental Review for Q4 2022 had rental growth for the quarter at two per cent, down from the 2.3 per cent in the September quarter and the peak growth rate of three per cent posted during the three months to May.
The rental vacancy rate also lifted to 1.17 per cent in December, up from a low of 1.05 per cent in November.
While rents continued to climb in the capital cities, CoreLogic Head of Research Eliza Owen said they had done so at a slower pace than during the June and September quarters.
She said that a seasonal lift in rental stock combined with affordability constraints could be to blame for the slowdown.
“New advertised rent listings saw a seasonal peak in the four weeks to December 11th,” Ms Owen said.
“Through this period, 50,867 new advertised rental listings were counted by CoreLogic, which is the highest volume observed since mid-February, another seasonal high point.
“However, it’s important to recognise despite the increase in rental listings, the figures remain 13.8 per cent lower than the previous five-year average for this time of year.”
Despite these signs of supply improvement Ms Owen cautioned that it was still a landlords’ market.
“While a slowdown in the pace of rent rises could be a sign that the rental market is starting to shift, it’s not great news for tenants just yet. Rents are still rising in most capital cities and regional areas with vacancy rates low,” Ms Owen said.
She added that Australian rent values had lifted 22.2 per cent since September 2020 – the largest rental upswing on record.