Australia’s rental market for the September quarter saw Brisbane become the second most expensive capital city to rent a unit (jointly with Canberra), while Melbourne was replaced by Hobart as the most affordable city in which to rent a house.

These were two key milestones within the latest Domain Rent Report, that was characterised by a record-breaking streak of consecutive increases that pushed rents to fresh new highs.

Rent increases appear to be easing from the extreme hikes witnessed throughout 2022 and early this year, yet the pace of growth remains heightened compared to historical standards.

While combined capital median house rent rose 0.4% on average throughout the 2010s and for units by 0.6%, over the September quarter, rents increased by 3.4%.

The report attributes an unusual deceleration in rent gains, while Australia’s vacancy rate is at a record low, to an affordability ceiling being hit as stretched tenant budgets fail to keep pace with escalating rents and living costs.

Unsurprisingly, in light of cost of living pressures, recent RBA research suggests a rise in the average number of people per dwelling.

Capital city rents: Houses

Rent for Brisbane units up by a fifth

Based on Domain’s data, Brisbane’s median asking unit rent soared 19.6% ($90) over the past year, with vacancy rates remaining at a near record low of 0.7%.

Meantime, weekly rents for houses also reached a record high of $590 per week across Brisbane, with prices up 7.3% over the year.

Brisbane’s inner east region is the most expensive place to rent a house at $758 a week following a 1% rise over the quarter.

The city’s CBD is the more expensive for units at $650 per week after jumping 1.5%, with Ray White witnessing a vacancy rate just before winter slightly above zero.

Across the sunshine state, Surfers Paradise was the priciest for house rents following a whopping 10% quarterly spike in median asking rents to $1,100 per week.

Capital city rents: Units

Perfect storm conditions for ongoing rental crisis

Against a backdrop of mounting international migration, a shortage of new developments and decreasing affordability, Domain chief of research and economics Dr Nicola Powell expects the ‘perfect storm’ for a rental crisis to continue gathering momentum.

I don’t see any significant change, and nothing positive for tenants

“We’ve also seen Brisbane vacancy rates remain below one per cent for almost two years and that’s quite alarming,” said Powell.

“When you look at population growth for Queensland, it’s at 2.3% and that’s one of the strongest of all the states and territories … it’s creating a melting pot for extreme conditions.”

Beyond Brisbane, Sydney and Perth vacancy rates are at a record low, while Melbourne, Adelaide and Darwin are close to record lows. Alarmingly, the Domain report notes Adelaide and Perth have had a vacancy rate below 1% for around three years.

To bring vacancy rates back to between 2-3%, Domain’s data suggests Australia needs 40,000 to 70,000 additional rentals.

“I don’t see any significant change, and nothing positive for tenants,” said Powell.

Sydney rents at record highs

While Melbourne, Adelaide and Perth led rental gains over the September quarter, Sydney remains Australia’s most expensive city in which to rent a house and a unit, with vacancy rate returning to a record low of 0.9%, last seen in March 2023.

Despite the continual rise, Domain data reveals the pace of rental growth halving compared to the previous quarter, with annual rent hikes also losing momentum.

While this suggests the peak growth rate has passed, it still remains in positive double-digits and marks the longest stretch of annual increases on record.

In Sydney, house asking rents rose for the third consecutive quarter to hit a record high of $720 a week, while units experienced a substantial deacceleration of rent growth over the September quarter.

Despite the slowest quarterly gain since December 2021, the median weekly asking rent (units) is at a record high of $680, following nine consecutive quarters of growth, the longest stretch ever recorded for the city.