Residential rents hit record highs as national vacancy rates plummet


key takeaways

Key takeaways

National dwelling rental values rose 0.9% in June and rose 2.9% over the June quarter.

National dwelling vacancy rates fell to 1.2% from 2.2% this time last year.

Capital city rents increased 3.0% over the June quarter, outpacing regional rents (2.7%) for the first time since the onset of COVID.

All eight capital cities saw an increase in rental values over both the latest quarter and year-on-year, as did the individual house and unit markets.

National unit rents recorded double-digit annual growth for the first time, rising 10.0% over the 12 months to June.

Adelaide recorded the tightest rental markets across all property types, with 0.3% of Adelaide’s houses and units vacant in June.

Adelaide also recorded the strongest rental growth across both property types over the June quarter, with unit rents rising 3.9% over the three months to June and up 4.4% for house rents over the same period.

Canberra remains Australia’s most expensive capital city rental market with a typical house renting for $759 per week and a typical unit costing $573 per week.

Melbourne replaced Adelaide as Australia’s most affordable house rental market, with the typical house renting for $506.

National dwelling gross rental yields increased to 3.33% for the quarter with mixed results among the capitals.

Australia’s rental market continues to tighten as low supply levels cause national vacancy rates to dive and rents to rise across all capital cities and property types over the past three months.

CoreLogic’s Quarterly Rental Review for Q2 2022 shows the national rental index increased 0.9% in the month to June and 2.9% over the June quarter, a 30 basis point increase in the three months to March.


Capital city dwellings

Dwelling rents are 9.1% higher across the capital cities and up 10.8% in regional areas compared to June 2021.

The recent upwards trend in rents has occurred mostly in the absence of overseas migration, with such strong rental conditions attributable to a combination of low supply and higher demand due to shrinking household sizes.

This sustained period of strong rental growth has seen national dwellings record the highest annual growth in rental values since December 2008, when rental demand was supported by record levels of international migration.


However, the current surge in rental demand has occurred largely in the absence of overseas migration and has instead been driven by factors including low supply and a decrease in the average household size which has amplified domestic rental demand over the COVID period to date.

Vacancy rates across national dwellings fell to a record low of 1.2%, down from 2.2% this time last year, led by falls in available rental properties across all cities except for Canberra, where vacancies lifted marginally to a relatively tight 1.1%.

A shortfall in rental supply levels had placed considerable pressure on the market, with rental listings in June -34.0% below the country’s long-term average for this time of year.

Capital city rents bucked the trend seen since the onset of COVID, surging 3.0% for the three months to June, outpacing regional growth rates, which rose 2.7% over the same period.

In a trend seen since February, quarterly growth in unit rents outpaced the increase in house rents across both the combined capitals (up 3.5% and 2.7% respectively) and combined regional markets (up 3.2% and 2.6% respectively).


Rental demand across the medium and higher density segment has surged throughout the first half of the year, partially driven by worsening affordability in the housing sector.

Since March 2020 house rental values have increased at nearly twice the rate of unit rental values with the gap blowing out to 13.5% in December 2021.

It’s likely the gap in rental values will narrow further as rental demand continues to shift towards relatively more affordable higher-density properties.

Adelaide rents increased 4.3% for the quarter, its strongest quarterly rental growth rate since CoreLogic records commenced in 2005.


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