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Rental prices start to stagnate as conditions ease

There has been some positive news for tenants, with the latest Domain Rent Report revealing rental price grow is either slowing, stagnating or declining across the capital cities.

Vacancy rates have also lifted as the market looks to have turned a corner heading into the second half of 2024.

According to the report, Sydney and Melbourne have recorded the weakest June quarter for house rents since 2021, while Brisbane, Adelaide and Perth have recorded the weakest since 2020.

Sydney’s median house rent remained steady at $750 per week in the June quarter, while Melbourne’s grew at 1.8 per cent, to $580 per week, but that growth was halved from the previous quarter.

Across the combined capitals the pace of quarterly rental growth was 1.5 times slower in the June quarter than the March quarter of 2024.

Weekly rents for houses also didn’t budge in Perth in the June quarter, remaining at $650 per week, while in Hobart they fell 1.8 per cent.

Domain Chief of Research and Economics, Dr Nicola Powell, said while June was a traditionally slower time for the rental market, the easing conditions did not appear to be a blip on the radar.

“When you think of June and the winter months, it is a quieter time of year, and you do tend to find rental growth is weaker because demand is weaker,” she said.

“But when you compare the outcome over this June quarter compared to all of the other June quarters, we’ve got many cities now seeing the slowest outcome, or the weakest outcome, over a June quarter in a number of years.

“So I think that really does showcase that the tide is changing.”

Domain Chief of Research and Economics Dr Nicola Powell. Photo: Domain

When it comes to units, the June quarter was the weakest since 2021 in Sydney, Melbourne and Brisbane, since 2020 in Canberra and since 2018 in Perth.

Sydney is still the most expensive capital city to rent a unit in, with a median rent of $720 per week, while Hobart is the cheapest, at $460 per week.

“It really shows that the breaks are on in terms of rental growth,” Dr Powell said.

Dr Powell also pointed out that the current situation was a little “unusual” given vacancy rates were still below 2 per cent and it was a landlord’s market.

“What we’ve got now is stalled growth or slowing growth and some cities declining,” she said.

“And I do think that speaks volumes to that affordability ceiling that I think tenants have reached and surpassed.”

The report also revealed that the national vacancy rate lifted slightly, from 0.7 per cent in the March quarter, to 1 per cent in the June quarter.

Vacancy rates also lifted in every capital city, except Darwin, where they fell from 1.1 per cent to 0.7 per cent.

“Perth has a vacancy rate at a two year high,” Dr Powell said.

“It’s still very low, but it is a two year high.

“Adelaide is the highest in two years and eight months and Sydney, Melbourne, Brisbane and Canberra are at a six month high.

“What this shows is that rental choice is rising and I think that’s helping to dissipate some of the competition between tenants.”

Dr Powell said views per listing had also eased, including in Sydney, where the potential number of tenants per rental listing was 27 per cent down on the same time last year.

She said while it would take significant change for the market to become a renter’s market, several key indicators were at least now heading in that direction.

“We are seeing more investors come back in (to the market), we’ve seen some demand pressures ease, population growth is past its peak, particularly overseas migration, and even when you look at some of the elements of interstate migration, that’s also past its peak,” Dr Powell said.

“So we’ve got all of these things amalgamating that’s helping to ease overall conditions.”

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Kylie Dulhunty

Kylie Dulhunty is the Editor at Elite Agent.