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It’s well known that Australia’s property prices have had a bumper couple of years, with the national median house price surpassing $1 million for the first time in the final quarter of 2021.
But it’s not just sale prices that are surging – rental markets in some suburbs are also hitting the spotlight.
In fact, I see 2022 as a year of strong rental increases in many parts of Australia.
A rental crisis?
We’ve had a chronic shortage of homes available for rent for several years now, but it will get worse this year with our borders opening at a time of historically low vacancy rates.
In fact, vacancy rates are below 1% for houses in many locations across the country meaning strong competition from hopeful tenants looking to rent at almost any price will see rents for houses rising strongly.
Apartments are generally still in plentiful supply, so unit rental growth is unlikely to be as strong.
Recently new data highlights the top 20 rental markets in Australia where rent prices are expected to increase in the next rental review.
In all the top-20 ranking suburbs, rents increased at least 32% during the past year.
Most of the suburbs have reported vacancy rates under 1%, with some suburbs reporting 0%.
It should be noted that when a suburb has a vacancy rate of zero it doesn’t mean there are literally no rental properties.
Rental properties are regarded as ‘officially’ vacant when they’ve been on the market for 21 days or more.
Of the 20 suburbs, 11 are in regional locations and 9 are in the capital cities, while 14 are house markets and 6 are unit markets.
Queensland recorded the greatest number of suburbs in the top 20 rankings at 6, followed by New South Wales (5), Western Australia (4), and Tasmania (2).
Victoria didn’t feature among the top 20 on the list.
Here’s the full list:
Top 20 rental markets expected to grow
|Rank||State||Suburb||Type||Median Weekly Rent||Vacancy Rate|
Hood founder and CEO Tommy Fraser said one big reason rents were likely to increase in these 20 suburbs was because demand was so high.
“Ever since the pandemic started, people have taken a greater interest in where they live, both in terms of the location and the type of property,” Fraser said.
“The interesting thing about these 20 suburbs is their diversity. There are metro waterside suburbs like Sorrento in Perth; sea-change locations like Paradise Point in Queensland; and tree-change locations like Invermay in Tasmania.”
Rental hotspots for 2021
Not only do we have data to show the suburbs where rent is expected to increase the most, Domain’s final Quarterly Rent Report for 2021 also reveals the top 5 suburbs where rent prices rose the most over the past 12 months.
Australia’s rental housing sector as a whole saw annual price growth of 7.4 per cent – the biggest yearly increase since 2009.
In some suburbs, rent prices increased as much as a huge 47.1%.
Of the top 5 suburbs, 2 are located in NSW, 1 in QLD, 1 in WA, and 1 in Tasmania.
Queensland’s Mount Coolum took out the top spot for the suburb with the strongest increase in rent prices for 2021.
Prices in the coastal suburb surged 47.1% over the year, with the average rental house now costing around $750 per week.
South Headland in WA came in very close behind with a 47% increase to around $588 per week.
Here’s the full list:
|Rank||Suburb||State||Average rent price (per week)||Increase|
A final word of warning
While cash flow keeps you in the game (in other words your rent is important), it’s really capital growth to get property investors out of the rat race.
So while it’s nice to know where rentals are increasing, it’s even more important to understand the multiple factors that will lead to future capital growth as 2022 will be very different from 2021.
Last year property values increased in a venue in almost every location around Australia – that’s very unusual.
Around 98% of locations across Australia recorded price uplift; most had double-digit growth and many places rose by more than 20%.
Moving forward, the various property markets will be very segmented, which is a more “normal” property market.
Some locations will rise strongly, some will increase in value moderately, and some locations will languish, and a few areas will experience falling property values, based on local supply and demand.