Weekly rental prices have surged almost 5 per cent across the country to finish 2021 at a national median of $450 per week, new data shows.
In the biggest rent increase in the past five years, the PropTrack Rental Report for the December 2021 quarter shows weekly rents increased 4.7 per cent.
The surge is being driven by rental prices in regional Australia, which jumped 5 per cent in the last quarter of 2021 and are a huge 10.5 per cent higher year-on-year.
PropTrack Director of Economic Research, Cameron Kusher tipped the national rental market would remain tight in the coming months with reduced supply and soaring prices.
“With international borders re-opening, it’s likely that the coming months will see the excess rental stock in inner city areas reduce as migrants come back and occupy those properties,” Mr Kusher said.
“The re-opened borders could provide further challenges as the return of travellers, both domestically and internationally, sees landlords contemplate moving their rental properties from long-term leases to short-term letting.”
The report also showed a substantial difference between house and unit rental prices, with house rents up 2.2 per cent over the quarter and 7 per cent year-on-year, while unit rents jumped 1.2 per cent over the quarter but remained unchanged year-on-year.
Weekly rents increased in all capital city and regional markets except Melbourne, where they fell 2.4 per cent, while remaining unchanged in Sydney.
But it’s not all bad news for the nation’s two biggest cities, with a clear divergence between house and unit rents.
Sydney house rents are 7.3 per cent higher year-on-year, while unit rents have fallen 1 per cent.
In Melbourne, house rents are 2.3 per cent higher, while unit rents have fallen 6.1 per cent.
“Across the capital cities, vacancy rates in Sydney and Melbourne are likely to tighten as migration returns, which is expected to result in some moderate rental growth in those markets,” Mr Kusher said.
New rental listings also recorded a monthly fall of 27.2 per cent in December to reach the lowest number of new listings since April 2010.
Year-on-year new rental listings dropped 13.2 per cent, with falls of 14 per cent in capital city markets and 10.3 per cent in regional areas.
Mr Kusher said new rental listings recorded the largest year-on-year falls in regional WA (down 26.9 per cent), Melbourne (down 19.3 per cent) and regional SA (down 18.9 per cent).
The only regions to record increases were Darwin (up 12.1 per cent), regional NT (up 13.4 per cent) and Canberra (up 5.8 per cent).
With rental stock reducing and prices rising, competition for properties is strong, with the median number of days a property is on realestate.com.au before being rented at a historic low of 21 days in December 2021.
“Without an influx in new rental supply it seems likely that we will continue to see properties being snapped up quickly,” Mr Kusher said.
“The ongoing tight rental conditions are also expected to result in further increases to rental rates. In regional areas, we may start to see some pressure ease as people make the shift back to the city or they purchase homes locally after having rented for a while and having decided to stay.
“In a positive for renters, property investment will lift over the coming year. With more investors purchasing properties this will in-turn add to the rental supply and hopefully ease some of the surging rental prices.”