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Rents rise at fastest pace since 2008

4 min read
27 Oct 2021
rent report

It’s getting tough out there for renters, with national rents 8.9% higher year-on-year as of September 2021.

The CoreLogic Quarterly Rental Review report for the September 2021 quarter revealed the highest annual growth rate for rents since July 2008 – more than 13 years ago.1

That’s despite the rate of quarterly growth tapering somewhat, with the national rental index rising 1.9% over the September quarter compared to 2.1% in the June quarter.

Brisbane recorded the most significant quarterly growth rate, with rent increasing 2.6% from July to the end of September; Perth saw the smallest increase at 0.3%.

Annually, however, Darwin rental properties saw a massive 20.9% increase in rental prices, with 1.8% being the lowest in Melbourne.

According to CoreLogic’s report, a shortage of stock combined with high demand for houses over units has influenced this sizeable increase.

“Renters are clearly looking for lower-density housing options, with house rents rising at more than double the pace of units 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%),” CoreLogic’s Research Director Tim 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.”

Interestingly, rents in regional areas increased by more than their capital city counterparts over the September quarter, at 2.2% and 1.7% respectively.

Regional Australia’s annual rate of rental growth of 12.5% in September 2021 was the highest annual figure on record, dating back to the beginning of CoreLogic’s rental index in 2005.

“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% 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.”

CoreLogic’s latest rental report coincides with the September quarter’s Consumer Price Index (CPI) data from the Australian Bureau of Statistics (ABS), which shows that rents have fallen 1.2% since the beginning of the pandemic in March 2020.2

However, this only includes data from Australia’s eight capital cities, and this decrease is largely influenced by falls in Sydney (-3.9%) and Melbourne (-2.1%).

Every other capital city recorded an increase in asking rents since pre-pandemic times.

“A two-speed rental economy remained evident in the September quarter,” ABS Head of Prices Statistics Michelle Marquard said.3

“Low vacancy rates drove price rises in Brisbane, Adelaide, Perth, Hobart, Darwin and Canberra, while high vacancy rates, particularly for inner cities properties, saw rental prices fall in Sydney and Melbourne on both a quarterly and annual basis.” CPIrents

Which capital city is the most affordable for renters?

It doesn’t look like renters will see a reprieve from increasing prices anytime soon, with Mr Lawless saying CoreLogic expects rents to rise nationally for the foreseeable future.

He also added that “little increase to household incomes” will make rental affordability even more of an issue.

“Data to March shows renters were spending an average of 28.7% of their household income on rental payments, which is slightly above the decade average of 28.1%,” he said.

“Rental affordability has deteriorated further from there, which is likely to see more renters looking towards higher density rental options where renting tends to be more affordable.”

Earlier this month, Domain released its quarterly rental report for September, which revealed house and unit rents in capital cities have seen quarterly increases of 2.5% each.4

Unit rents are still 2.1% down annually, but according to Domain, they are now increasing at exactly the same rate as house rents after five consecutive quarters of falls.

“Unit rents in the combined capital cities had been impacted mostly by the drops in Sydney and Melbourne. But now we’re seeing that turn around with unit rents increasing nationally in the September quarter at the same rate as house rents,” Domain chief of research and economics Dr Nicola Powell said.

“There has been a bit of a move back into the city centres of Melbourne and Sydney, which suffered the most in the pandemic.

“But with unit rents rising nationally, that will make it harder for first-home buyers trying to save for a deposit.”

The average weekly asking price for rents across all capital cities is now $488 for houses and $438 for units.

Canberra is home to the most expensive houses and units for renters, at $645 and $520 per week.

However, the most affordable city, in terms of weekly asking prices, is:

  • Adelaide for units: $350 per week
  • Melbourne for houses: $430 per week

Average weekly rental cost: houses

CAPITAL CITYSEP-21JUN-21SEP-20Quarterly growthYearly growth
Sydney$580$550$550+5.5%+5.5%
Melbourne$430$430$4400.0%-2.3%
Brisbane$460$450$415+2.2%+10.8%
Adelaide$440$430$400+2.3%+10.0%
Canberra$645$630$580+2.4%+11.2%
Perth$450$450$3950.0%+13.9%
Hobart$495$495$4500.0%+10.0%
Darwin$620$593$495+4.6%+25.3%
Combined Capitals$488$477$463+2.5%+5.5%

Source: Domain

Average weekly rental cost: units

CAPITAL CITYSEP-21JUN-21SEP-20Quarterly growthYearly growth
Sydney$485$470$495+3.2%-2.0%
Melbourne$370$365$400+1.4%-7.5%
Brisbane$410$400$395+2.5%+3.8%
Adelaide$350$350$3400.0%+2.9%
Canberra$520$500$480+4.0%+8.3%
Perth$380$380$3400.0%+11.8%
Hobart$400$400$3950.0%+1.3%
Darwin$470$450$390+4.4%+20.5%
National$438$427$447+2.5%-2.1%

Source: Domain


Sources

Image via Shutterstock

  1. CoreLogic, 26 October 2021. ‘Australian rents increase at fastest annual rate since 2008’.
  2. Australian Bureau of Statistics, 27 October 2021. Consumer Price Index, Australia.
  3. Australian Bureau of Statistics, 27 October 2021. ‘CPI rose 0.8% in the September 2021 quarter’
  4. Domain, 14 October 2021. September 2021 Rental Report.
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avatar of author: William Jolly

Written by William Jolly

William is a Senior Finance Writer at Compare the Market, and has previously worked as a finance journalist for several years. He specialises in writing about financial products like home loans in ways that the average Australian can understand and enjoy. When he's not writing about saving money, William enjoys playing football (soccer), watching a good movie and spending time with his dog.

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