House rents hit record highs

Renters across Australia are finding themselves in a heated market with shrinking supply, as house rents in capital cities have hit the strongest annual growth in 13 years ($508 per week) while median unit rents remained below the 2018 peak ($464 per week), according to Domain’s data.

Although house rents were at record highs, unit rents were growing at a faster rate over the first quarter in 2022 and were helped by a return to CBD office and both interstate and international movement.

Domain Quarterly Rent Report found that all capital cities except Sydney experienced a rise in house rent prices over the quarter, while Melbourne remained Australia’s most affordable capital city to rent a house, at $450 asking rent per week.

At the same time, Melbourne’s unit rental market was on the rise which saw the steepest quarterly increases in eight years, marking its first annual increase since the pandemic- and shifting the city into a landlords’ market.

Brisbane saw its record-breaking streak continued, with both house and unit rants rapidly rising to new record highs. According to Domain, this trend was expected to be continued due to Queensland’s strongest population growth which benefitted from interstate migration which was as a result a search of better affordability, lifestyle change, work-life balance and the expanding job market.

Following this, Canberra saw the biggest discrepancy between house and unit rents, as house rents increased 3.7% over the quarter to $700 after surging 16.7% over the past year.

The recent changes also left Hobart and Adelaide in the midst of a rental crisis as the vacancy rate were sitting at another multi-year low.

Commenting on gross yields from rentals, Dr Nicola Powell, Domain’s Chief of Economics and Research, said that high rental yields were likely to attract investors to cities such as Perth, Darwin and Canberra, with investors being able to tap into competitive rental trends and use them to their advantage.

“In the current state of the rental market there are opportunities, it is worthwhile considering whether you are buying in metro or regional Australia, and the subsequent property type that maximises opportunities for return. For instance, the unit gross rental yields for combined capital cities increased by 2.3% over the past quarter, however, decreased by 1.4% for houses,” she concluded.