Rental prices in Australia’s combined regional markets have increased by almost three times the rate as capital city markets over the past year.
According to CoreLogic’s hedonic rental value index, which tracks the combined value of rent estimates for all properties, rent prices across regional Australia rose 9.6 per cent in the 12 months to April.
That compared to a comparatively modest average price increase of 3.3 per cent in capital city markets over the same period.
The news followed the release of CoreLogic’s Quarterly Regional Market Update earlier this week, which revealed the annual growth rate of combined regional dwelling values (13 per cent) was more than twice that of the capital cities (6.4 per cent) in the same 12-month period.
The index covers Australia’s 25 largest non-capital city markets and, of the regions analysed, it also found total available rent listings had halved on average over the past year.
In keeping with the results of the Regional Market Update for dwelling values, the biggest uplift in rental prices was in the Richmond-Tweed area of northern NSW, which includes Byron Bay, where there was a 17.6 per cent rise,
The lowest increase was in the capital region of NSW, where rents rose by 2.3 per cent.
Across the 25 regions, the average time a rental property spent on the market has declined by eight days – from 25 days in the three months to April 2020, to 17 days over April 2021.
The region with the lowest typical days on market was across the Gold Coast, where the median amount of time a rental spent on the market was two weeks.
According to CoreLogic’s Australia’s Head of Research Eliza Owen, the data suggests tenants are having to compete harder for rental accommodation in major regional centres, not only in terms of price, but in the pace of their decision-making.
“There are several factors which may account for the rapid tightening in rental markets, though this applies very generally to regional Australia rather than the specifics of each market,” Ms Owen said.
“These include: Less people moving from regions since the onset of COVID. According to ABS data, in the 2020 calendar year, migration away from regional Australia to capital cities fell to 190,200.
“This is around -4 per cent below the series average, and may have contributed to less rental stock being freed up over the year,” Ms Owen said.
Alongside the fall in people going from regions to cities, December and September quarter data from the ABS showed an increase in migration from cities to regions, compared with the equivalent quarters in 2019.
“Over the whole calendar year, there was actually less migration to regional Australia from cities (at 233,122) than in the previous year (233,779),” Ms Owen said.
“Regional relocation from cities to regions may also be increasingly skewed to higher-income workers, which would put further upward pressure on purchase and rent prices.
“This is because remote work tends to be concentrated in the ‘knowledge economy’, such as for professionals, as well as clerical and administrative workers.”
Ms Owen also said the international border restrictions have boosted domestic tourism, which may have implications for rentals.
“At the onset of the pandemic, where travel and tourism was immediately impacted, anecdotes emerged of short-term rental accommodation owners converting their properties to the long-term rental market.
“However, with domestic travel restrictions eased, such properties are likely to have been re-converted to the short-term rental market.”
Ms Owen said creating more affordable housing in both regional Australia and major cities could ease rental conditions and also restrict internal migration based on affordability constraints.