Rising rents are starting to slow down



Stressed tenants may soon find relief as the pace of rental growth begins to slow.

Tenants experienced the fastest growth last year according to Corelogic’s records, with a trough in vacancy driving national rents up 10.2 percent.

But December rental data shows the growth rate slowing to two percent in the last three months of 2022.

This follows growth of 2.3 percent in the September quarter and the highest growth rate of 3 percent in the three months to May.

PropTrack data, released the same day, also showed rent growth stabilizing in the December quarter.

And as the rate of growth begins to slow in line with a slight seasonal decline in vacancy rates and tenants reaching the limit of what they can afford, Eliza Owen, Corelogic’s head of research, said tenants had to wait a while for prices to actually kick in. to descend.

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“Rents are still rising in most capital cities and regional areas with low vacancy rates,” Ms Owen said.

Kate Colvin, head of Homelessness Australia, said vulnerable tenants were falling deeper into housing stress.

“These figures are alarming and further evidence that more Australians are struggling, diving deeper or into housing stress and poverty for the first time,” she said.

“The horrible stories we continue to hear about people sleeping in cars and skipping meals will sadly continue.”

Ms Colvin called on the government to ease pressure on tenants in May’s budget, including increasing Commonwealth Rent Assistance payments and putting more money into social housing.

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Looking ahead, Corelogic said the outlook for the rental market was mixed.

Ms Owen said the return of normal migration patterns, which the government predicted in its population statement last week, will keep upward pressure on rents, particularly in the popular parts of Sydney and Melbourne.

In addition, the Reserve Bank’s cycle of interest rate hikes will slow real estate investment by limiting the amount that can be borrowed, putting pressure on supply.

But a seasonal increase in new listings is expected in early 2023, which will improve choice and ease some of the pressure on rents.

Region by region, Canberra experienced the sharpest fall in rents, with residential rents falling 0.7 percent after a peak-to-trough increase of 18.1 percent from September 2020.

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The nation’s capital still holds the title of most expensive place to rent, but at just $2, with Sydney’s median rent of $679 per week narrowing the gap.

“Unlike Canberra, a high level of net overseas migration to NSW and Victoria has greatly offset negative net internal migration flows in the year to June 2022,” said Ms Owen.

She said the two largest cities remain top destinations for migrants.

“This is likely to have contributed to unprecedented annual growth in unit rents by 2022, which reached 15.5 per cent in Sydney and 14.2 per cent in Melbourne.”