Australia’s rental market is officially cooling down after a period of record-breaking growth. The year 2024 saw a notable slowdown in national rental price increases, with a rise of 4.8% year-over-year. This is a significant deceleration compared to the sharp 8.1% surge recorded in 2023, according to the latest rental property report from CoreLogic.
This result marks the lowest annual rental increase in the 12 months leading up to March 2021, when rent prices rose by 3.6%. While this figure remains high compared to the pre-pandemic average, it confirms that the national rental market has well and truly passed the peak of its recent boom.
Factors Driving the Slowdown in National Rental Growth
According to CoreLogic economist Kaytlin Ezzy, several factors have contributed to this trend, with affordability being a primary driver.
She noted that since the onset of the COVID-19 pandemic, the national median rent has surged by 36.1%, which translates to an increase of $171 per week, or approximately $8,884 per year. As of September 2024, the average renter was spending 33.0% of their annual pre-tax income on rent.
Beyond affordability constraints, Ms. Ezzy explained that shifts in supply and demand have directly impacted the pace of rental growth.
“A decrease in net overseas migration is a key factor reducing rental demand, with net migration levels expected to return to around pre-COVID levels by the 2026/27 financial year,” she stated.
“On the supply side, the value of new investment loans increased by 26.3% in the year to September 2024. This rise in investor activity has subsequently boosted the net supply of rental properties.”
This combination of increasing supply and easing demand has helped improve vacancy rates, which shifted from a low of 1.4% in November 2023 to 1.9% by the end of 2024.
A Snapshot of Australia’s Rental Market by Capital City
Across the capital cities, most recorded a slowdown in annual rental growth. Sydney and Melbourne saw their growth rates taper from 9.9% and 11.0% respectively in 2023 to just 3.0% and 4.1% in 2024.
Despite a slight quarterly decrease in rents, Sydney remains the most expensive capital for renters, with a median weekly rent of $773. Stronger rental growth helped Perth claim the second spot at $695/week, overtaking Canberra at $667/week.
A couple of cities that saw positive annual rental growth were Hobart (6.0%) and Canberra (2.6%).
Hobart continues to be the most affordable capital city for renters and is the only capital with a median weekly rent below $600, at $554/week. Melbourne is the second most affordable at $604/week, followed by Adelaide at $611/week.
Source: CoreLogic. 2024. National rental market has “well and truly passed the peak of the recent rental boom”
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