Domain’s latest Rent Report for the September Quarter of 2024 reveals Australia’s rental market has reached a critical juncture.
Renters are still feeling the pinch with record high prices but new data from Domain reveals the lowest September quarter growth rate since 2019 for houses and 2020 for units, suggesting the post-pandemic rental boom is finally losing steam.
“Australia’s era of explosive rental growth appears to be nearing its end," said Domain Chief of Research and Economics, Dr Nicola Powell.
"After enduring the steepest and longest rental surge in history our latest Domain Rent Report shows that all capital cities have passed their peak in growth rates and are now decelerating rapidly, with some cities already in decline.
"This is long-awaiting good news for renters, 38% of which are renting to save for a property.
"For the first time in nine months, quarterly rental growth for both houses and units has stalled across the combined capitals, marking the weakest September quarter since 2019 for houses and since 2020 for units.
"This has slowed annual gains to an almost three-year low across the combined capitals, with most cities at multi-year lows,” Dr Powell said.
What you need to know:
- Big city blues; Annual rent increases for houses have hit multi-year lows in Sydney, Melbourne, Brisbane, Perth, and Adelaide, suggesting that rising rents may have reached their peak.
Rental for houses:
- Sydney records its weakest growth rate for a September quarter in four years, with annual gains now at their lowest in almost three years (weekly rent of record high $775).
- Melbourne rents mark the weakest outcome for a September quarter since 2021 (weekly rent at record high of $580 per week).
- Brisbane rents have declined for the first time in just over four years, marking the end of the city’s longest and steepest growth period.
Rental for units:
- Sydney rents remained steady over the September quarter for the first time this calendar year. This marks the weakest outcome for a September quarter in four years (holding at a record $720 per week).
- Melbourne rents remained steady for the second consecutive quarter. This is a significant turnaround following a record run of rent gains (holding a record of $550 per week).
- Brisbane rents tumbled 1.7% (or -$10) over the September quarter to $590 per week. This marks the first quarterly decline in just over four years.
“It has been a while since we’ve been able to bring good news to renters, who make up approximately 30% of households. Our research tells us that 48% of those who’ve rented in the last 12 months said they had to move further out from where they wanted to be due to affordability constraints. Undoubtedly, affordability is a significant factor contributing to this slowdown and will likely continue to restrict further growth,” Dr Powell added.
Market dynamics update:
- Rental demand is easing, with the number of prospective tenants per rental listing on Domain falling to its lowest level since 2019, indicating a better balance between supply and demand.
- 39% of those looking for a rental choose to rent rather than buy, as it lets them live in a better home or area than they could buy.
- On the supply side, one of the biggest shifts has been a rise in investment activity, with the value of investor loans rising by 35% annually. Investors are likely reacting to capital growth potential and seeking to purchase before the RBA lowers the cash rate (which will likely spark housing activity).
- Currently, investors account for 38% of new home loans, which is well above the decade average.
