Rental market pressures have been intensifying in capital cities, with rents up 13% year-on-year to $520 per week.
New PropTrack research found that strong demand was seeing properties leased quickly, affording landlords the opportunity to increase rents.
In the combined capital cities, total rental listings were sitting at historic lows in March 2023 after falling 18.3% year-on-year.
With stock restricted in the capitals, demand has been surging with the number of enquiries per listing on realestate.com.au up 8.3% year-on-year.
Outside of the capital cities, regional rents were up just 4.5%.
Regionally, total rental listings were up 22.5% year-on-year to sit at their highest level since July 2020. This was the largest annual increase since December 2010.
The average difference in enquiry per listing between capital cities and regional markets is 12. A year ago, both markets saw the same number of enquiries per listing.
PropTrack Director of Economic Research Cameron Kusher said the national rental market was extremely tight over the first quarter of 2023.
“Rental vacancy rates were edging lower due to exceptionally strong demand for rental properties and an ongoing shortage of supply,” Kusher said.
“As a result of these conditions, properties were leasing quickly, and landlords were afforded scope to increase rents.
“The challenges for renters are being exacerbated by the fact that higher interest rates have reduced borrowing capacities. This is making it harder for renters to transition into first home buyers and more difficult for investors to purchase properties, restricting rental supply.”
The rapid rebound in migration to Australia was also increasing competition for rental properties.
Most of the people arriving in Australia don’t own a property in the country and would be seeking somewhere to rent, adding to rental supply shortages.
These rental pressures were being felt acutely in Sydney, Melbourne and Perth, while regional markets were seeing demand soften as pandemic-induced trends subside.
“Fewer people are leaving capital cities for regional areas, some are returning to the capital cities and those who are staying regionally are likely now purchasing,” Kusher said.
“These trends are expected to continue, leading to a further easing of regional rental pressures. The biggest strain on the rental market is the lack of new rental supply, particularly in the larger capital cities.
“Investors continue to exit the market and few new investors are entering. Although there is a lot of housing supply under construction, most has been targeted toward the owner-occupier market rather than investors.
“Absent a return of investors to the market or a big increase in first home buyer numbers, it seems unlikely that the strong demand and insufficient rental supply will be rectified any time soon. This means the cost of renting is expected to continue rising – particularly in capital cities.”