Australian rental prices have surged over the past 12 months, recording the fastest annual rise since 2008, new data has revealed.
A shortage of stock and high demand for freestanding houses has led to the dramatic increase.
The rise, which was particularly sharp in regional areas, comes despite quarterly growth rates starting to ease in the three months to September.
National rental rates are 8.9 per cent higher year-on-year, the highest annual growth in dwelling rents since July 2008.
CoreLogic’s Research Director Tim Lawless said several factors were influencing rental growth including a desire for detached housing and lack of supply due to previously historically low levels of investor activity.
“Renters are clearly looking for lower density housing options, with house rents rising at more than double the pace of unit rents over the past year, however this trend is starting to narrow, with national house and unit rents rising at the same rate over the September quarter (1.9 per cent),” Mr Lawless said.
“Another factor that may be contributing to rental demand is that more renters are working from home, which could be driving a trend towards smaller rental households as tenants look to maximise their space and working environment during COVID-19.”
Mr Lawless said private sector investors were now the largest contributor of rental housing, accounting for 31 per cent of housing market activity, up from just 23 per cent prior to January 2021.
Regional dwelling rents rose 2.2 per cent over the September quarter compared to capital city dwelling rents, which increased 1.7 per cent over the same period.
Regional Australia’s annual rate of rental growth of 12.5 per cent in September 2021 is the highest annual figure on record, since CoreLogic rental index figures commenced in 2005.
In comparison, the combined capital cities recorded annual rental growth of 7.5 per cent over the same period, is the highest annual growth rate for the combined capitals since January 2009.
“Demographic data is showing a clear trend towards regional population growth, driven by a combination of more people leaving cities for the regions, but also fewer people moving from the regional areas to the capitals,” Mr Lawless said.
“With regional housing rents rising 12.5 per cent over the past year at a time when household incomes have hardly budged, it’s likely that rental affordability is becoming a lot more challenging in some of the most popular regional markets.”
The strongest quarterly rental growth was recorded in Brisbane with 2.6 per cent growth, and Sydney with 2.3 per cent. Perth, recorded a surge in rental growth earlier in 2021, but saw rates increase by just 0.3 per cent during the September quarter.
Adelaide remains Australia’s cheapest capital city for rentals, with typical dwelling rents of $440 per week compared to Canberra’s rates, which are the most expensive in the country at $633 per week.
Melbourne is Australia’s second more affordable rental market, with a typical dwelling costing $450 per week to rent, or just $9.30 a week more than it costs to rent in Adelaide.
For the first time CoreLogic’s Rental Review includes a list of the top 30 most expensive and affordable rental suburbs for each capital city as well as key rent and gross yield statistics.