Rental stock levels are more than 35 per cent below the five-year average and growth in annual rents has broken into double digits for the first time on record, new figures show.
CoreLogic released its Quarterly Rental Review for the September quarter of 2022, with the latest data showing national dwelling rents rose 0.6 per cent in September and 2.3 per cent over the September quarter, down from a 2.9 per cent increase recorded over the June quarter.
Annual growth in national dwelling rents also broke into double digits for the first time on record over the year to August, and held steady at 10 per cent over the 12 months to September.
Seven of the eight capitals saw dwelling rents rise over the quarter and the year.
CoreLogic Research Analyst and report author Kaytlin Ezzy said despite the slowdown in the monthly and quarterly rate of growth, the annual growth trend in national rents held steady at a record high 10 per cent in August and September.
“The past few years has seen unprecedented growth in rental values,” she said.
“We saw rents fall marginally over the first few months of Covid, but since August 2020, national dwelling rents have surged almost 20 per cent, equivalent to a weekly rent rise of approximately $90 per week.
“Initially driven by a reduction in the average household size, the continued upswing in values is likely now predominantly being driven by the strong return of overseas migration, coupled with extremely tight rental supply.”
Ms Ezzy said the slight slowdown in the rate of rental growth could be due to rising cost of living constraints, and tenants may turn to forming larger households in an effort to reduce costs.
Rental stock shortages continue to impact the market, with the total supply of advertised properties 35.4 per cent below the previous five-year average.
The national vacancy rate fell from 1.3 per cent in June to 1.1 per cent in September, which is the lowest national vacancy rate on record.
The vacancy rate is tightest in Adelaide at just 0.3 per cent, followed by Perth at 0.6 per cent and Hobart at 1.1 per cent.
In Melbourne the vacancy rate is 1.2 per cent, while in Sydney, Canberra and Darwin it is 1.3 per cent.
“One factor which has likely negatively impacted rental supply is the decline in investor purchasing activity between early 2017 and early 2020,” Ms Ezzy said.
“Through this period, a mix of temporary changes to mortgage lending conditions, and the uncertainty surrounding the onset of COVID-19 limited residential property purchases.
“Additionally, CoreLogic recorded an increase in investor-owned housing stock being listed for sale through 2021 and into 2022, with many investors possibly looking to maximise capital gains through the upswing.”
The median rent of a dwelling in Brisbane increased the most in the September quarter, rising 3.8 per cent to $573 per week, followed by Adelaide and Darwin where the median rent climbed 3.6 per cent to $508 and $590 per week respectively.
In Sydney, the median dwelling rent jumped 2.9 per cent in the September quarter to $665 per week, followed by Perth, where the median weekly rent for a home increased 2.5 per cent for the quarter to $533.
Melbourne recorded quarterly growth in dwelling rents of 2.3 per cent to sit at $495, while in Hobart growth was marginal at 0.4 per cent to reach a weekly median rent of $551.
Canberra was the only capital city to record a decline in rental rates in the September quarter, falling 0.4 per cent to $682 per week.
Across the combined regional centres, the vacancy rate for the September quarter sat at 1 per cent, with a weekly median rent of $497.