New suburb-level analysis of CoreLogic’s Mapping the Market interactive tool reveals more than nine in 10 house and unit markets across the country have seen an increase in rents over the 2022-23 financial year.
Of the markets analysed, almost two thirds of unit suburbs recorded an annual rent increase of 10% or more, as did more than one third of house markets.
Mapping the Market tracks the 12-month change in the CoreLogic hedonic rental value index by suburb, which is an imputed valuation of rental income based on listings information and individual property attributes.
Adelaide, Perth and Regional Western Australia have seen the most widespread uplift in rent values, with 100% of suburbs analysed showing a year-on-year increase across both houses and units. Rent increases across Perth have seen another pick-up in momentum since early 2022, and rent values are now 13.4% higher across the city over the past year, and 41.8% higher than at the onset of the pandemic in March 2020.
CoreLogic Economist Kaytlin Ezzy said a shortage in rental listings has continued to place upward pressure on rents, with overall rental supply being negatively impacted by higher interest rates.
“Investors tend to shy away from the housing market during negative economic shocks. The sharp rise in interest rates has coincided with a -23.6% fall in new housing investment lending between April 2022 and May this year, and this includes a slight recovery in investment lending in recent months, which has lifted 10.0% from a low in February this year,” she said.
“On the demand side, record levels of overseas migrants, many of whom rent in inner-city unit precincts, has bolstered rental demand this year, causing an imbalance between rental demand and supply.
“For Perth in particular, there is a persistent shortage of rentals, with total rent listings now about -50% lower than the historic five-year average."
Brisbane, Adelaide, Perth and Darwin saw 100% of unit markets record rent value increases over the 12 months to June, while just three markets in Sydney (Long Jetty -3.7%, Wyong -2.5% and The Entrance -0.03%), two markets in Melbourne (Rosebud West -2.3% and Hastings -0.5%) and one market in Hobart (Claremont -0.2%) saw unit rents fall.
“Despite a few minor declines in the city's Central Coast region, Sydney units continue to record some of the strongest rental growth across the country. Units in Sydney's Inner-city market of Haymarket recorded the highest annual rise, up 32.6% or $276 per week, followed by Georges Hall (31.3%) and Arncliffe (30.9%) in the city's Inner South West," Ms Ezzy said.
At the other end of the spectrum, 18 unit markets in Canberra recorded a decline in rent value over the past financial year. Canberra and Hobart are the only two capital cities where rent listings are trending well above the previous five-year average. As of late July, total rent listings in Canberra totalled almost 2,400, compared with the historic five-year average of around 1,900 for this time of year.
Rental growth across capital city house markets was more diverse, with 147 of the 1,686 suburbs analysed recording a decline. This was heavily influenced by Canberra, where weaker population growth, looser rental supply and poor relative affordability saw just two suburbs (Watson 0.8%, Crace 0.1%) record an annual rise in house rents.
"While annual rental increases remain fairly geographically widespread, it's likely we'll see the pace of rental growth continue to moderate over the coming months, as cumulative rental growth pushes more renters towards their affordability ceiling," Ms Ezzy said.
CoreLogic’s Mapping the Market tool also showed a continued ramp-up in the capital growth recovery trend nationally. Almost 80% of house and unit markets showed a quarterly increase in home values in the three months to June, a stark contrast to the 80.7% that saw values fall between October and December last year. This may also help to loosen rental markets in the year ahead, as investor confidence in the housing market may be bolstered by stronger capital growth conditions.
Top 20 house and unit rent increases by suburb – 2022-23 Financial Year
The tables below highlight where rents have increased the most in the past 12 months at the suburb level across houses and units. Across both house and unit markets, Sydney dominates the ranks of highest growth.
The biggest house rent increases were in the neighbouring southwest suburbs of Campsie and Belfield, which may reflect a spill-over in demand from popular inner-west suburbs, as well as migration trends. The Inner South West of Sydney typically records one of the highest net overseas migration figures across the country, alongside Parramatta and the City and Inner South of Sydney.
Peppered through the list of highest house rent growth are suburbs in the Karratha region of WA, where activity across commodity mining and extraction is pushing up migration and rents to the region. For those not supported in the housing market through mining employment, this has created great affordability challenges for longer-standing residents.
Across the top 20 unit rental markets by annual growth, all are concentrated in Sydney, except for Travancore in Inner Melbourne. Increases of more than 30% have been seen across Sydney’s Kingsford and Haymarket, which are likely to be popular with international students due to proximity to major universities. Each of the top performing unit rental markets are very well serviced by transport, are close to the CBD and are high amenity areas. This likely makes them in high demand with both international and interstate migrants, and young professionals.
CoreLogic’s Mapping the Market tool is a powerful interactive map that provides visibility of housing prices and value changes across thousands of Australian suburbs. Access the map at www.corelogic.com.au/our-data/mapping-market.
CoreLogic Australia