Rental demand continues to soar as availability falls to lowest level in more than a decade

Near record demand and the lowest level of availability in almost 20 years is propelling a tough rental market, new analysis shows.

The PropTrack Rental Report March 2022 shows demand for rental properties has risen at near record levels nationally, climbing 37.1 per cent year-on-year and was at an historic high across the combined capital cities for the month.

Melbourne has seen the largest year-on-year increase in rental demand, up 59.6 per cent, while Sydney came in next (52.2 per cent), followed by Brisbane (32.2 per cent) and Adelaide (29 per cent).

The report also showed the number of properties available for rent in March fell four per cent, to the lowest level since August 2003.

PropTrack Director of Economic Research and report author, Cameron Kusher said the number of available rental properties was 24 per cent lower than it was a year ago.

“The strong demand for rentals experienced in 2021 has continued over the first quarter of this year,” he said.

“Demand remains near record high levels nationally, sitting at an historic peak throughout the combined capital cities in March 2022.

“The volume of properties listed for rent at a national level has continued to reduce over recent months, exacerbating shortages of stock and pushing the cost of renting higher.”

Mr Kusher said there was evidence some rental pressures were easing in certain regional areas.

“Sunshine Coast, Geelong, and Southern Highlands and Shoalhaven are three prevalent markets where several indicators suggest rental demand is slowing,” he said.

“Other regional areas may see similar trends emerge as those who moved during lockdowns either decide to stay and potentially look to purchase rather than rent, while others may now look to relocate back to the major cities given that they have re-opened and lockdowns have ended.”

The report showed weekly rents across the combined capital cities rose 1.1 per cent in the past three months, while in regional areas they climbed 2.4 per cent.

Darwin recorded the biggest year-on-year increase in rents with a 17.8 per cent rise, followed by regional Tasmania with a 15.2 per cent climb and regional NSW at 12.5 per cent.

“Renting remains a tough proposition for many people across the country, with the strong demand and limited supply meaning properties are renting quickly and rental rates are rising,” Mr Kusher said.

“It looks unlikely that there is any significant relief on its way.

“In fact, with international borders reopened and migration recommencing, we are anticipating a further tightening of rental supply over the coming months, which is likely to lead to further increases in rental rates.

“This is expected to be most prevalent in Sydney and Melbourne, the two largest rental markets in the nation and the two markets that have, until recently, been experiencing falls in rental rates.

“While the increase in investor purchasing that has been occurring should add to supply in the market, it will take time for this additional purchase activity to alleviate the current supply pressures.”

The fast pace of growth in property prices has also pushed rental yields lower, falling from 4.2 per cent in March 2021 to 3.9 per cent in March 2022.

Nationally, the median days on site for a rental property dropped to a historic low of 19 days, compared to 23 days a year earlier.

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