Australia’s rental market still favours landlords

Oksana Patron

6 April 2023

The Australia’s rental market continues to remain firmly locked in favour of landlords as rising demand and low supply create challenging conditions for tenants in 2023, according to the Domain’s Rent Report for the March quarter.

All capital cities have seen the longest stretch of continuous rental price growth on record as house rents rise for the eighth quarter in a row and unit rents rise for the seventh.

Record rents are spanning almost all metropolitan areas (except unit rents in Canberra and Darwin) with house rents surging by $135 a week and unit rents by $140 across the combined capital cities since the pandemic low.

Dr Nicola Powell, Domain’s Chief of Research and Economics, said the return of international travel in 2021 and 2022 saw Australia’s net overseas migration gain hit almost 304,000 new people in the 12 months to September 2022, providing a significant boost of population gain for Australia.

“The proportion of overseas migrant arrivals that were temporary visa holders is now sitting at 61% – a substantial driver of rental demand. The impact of migration was further highlighted following the announcement from China’s Ministry of Education to stop acknowledging degrees gained online in January. This saw the number of rental searches on Domain from China jump 124% over the March quarter compared to last year,” Powell added.

“With more demand for rentals and not enough supply, renters will continue to face limited choices and tough competition, particularly for cities that traditionally see a higher intake of residents from overseas like Sydney and Melbourne.”

Looking across the capital cities, the Domain’s report found what follows:

• The stability in Sydney house rents was short-lived, with rents rising again over the March quarter to hit a new record high with houses at $660 per week and units at $620 per week. Sydney units are experiencing an acceleration in rental growth while increases in house rents have lost pace annually.
• Melbourne house and unit rents rose for the sixth quarter in a row matching the longest stretch of rental price growth period which was achieved in 2007-08. House rental growth has accelerated to the fastest quarterly rise in six years and the steepest annual increase since 2008. Although house rents are hitting a record high, Melbourne still remains the most affordable city to rent a house, as other cities have seen more substantial growth.
• Brisbane’s house rents are at record levels but the annual outcome is the weakest since September 2021, suggesting that the steep increase in house rents is easing. Units continue the record-long stretch of rising rents following the seventh quarter in a row of growth.
• Adelaide houses continue the record-long stretch of rising rents following the eleventh consecutive quarter of growth to produce the fastest annual rise since 2005. Unit rents are rising faster than houses as affordability impacts tenants.
• Canberra house rents held steady over the March quarter at a record high to remain Australia’s most expensive city in which to rent a house. Unit rents fell for the first time since mid-2020, reversing the previous quarter’s growth. Rental choice has risen significantly over the past year to lift the vacancy rate and alleviate the current pressurised rental conditions.
• Perth’s house rents have risen for the sixth consecutive quarter reaching record levels. Unit rental growth doubled compared to the last quarter pushing unit rents to a record high for the first time since 2013
• Hobart house rents bucked the national trend to become one of two capital cities to flatline over the March quarter to hold at last quarter’s record high. Unit rents lifted to another record high, but the pace of quarterly growth has halved compared to the previous quarter.
• Darwin house rents surged over the March quarter, doubling the previous quarter’s pace of growth. Asking rents for units are now only $30 lower than the 2014 record high.