The Australian rental market is experiencing a shift that could signal some relief for renters, especially in major cities. Over the past month, there’s been a notable dip in asking rents across several capital cities—a trend not seen since the early days of the Covid-19 pandemic. But what does this really mean in a market that’s been red-hot for years?
In Sydney, where rents are notoriously high, the average weekly rent dropped by 1.0%, settling at $829. Melbourne, another pricey city, saw rents fall by 0.6%, bringing the average down to $632 per week. Even in Brisbane and Perth, which have generally been more stable, rents dipped by 0.5% and 0.6% respectively. Hobart took the hardest hit, with rents dropping by 1.6%, marking the steepest decline among the capital cities.
Yet, the story isn’t the same everywhere. Adelaide and Darwin, for instance, saw rent increases, with Adelaide’s house rents going up by 1.1% and Darwin by a striking 6.4%. These contrasting movements highlight the diversity and complexity of Australia’s rental market.
Coastal regions and CBDs have been particularly affected by these changes. Queensland’s Gold Coast, a popular spot, experienced a 1% drop in rents, while Victoria’s Mornington Peninsula saw a 1.4% decline. In Sydney’s CBD, the decrease was even more pronounced at 1.6%, reflecting shifting dynamics in central locations.
Despite these dips, the overall rental market remains tight. Vacancy rates across the country held steady at 1.3%, underscoring the ongoing demand for rental properties. In Sydney, the rental vacancy rate remained at 1.7%, with over 12,000 rental dwellings vacant as of July 2024. Melbourne’s vacancy rate also stayed stable at 1.5%, although the number of vacant properties edged up slightly from June to July.
Canberra reported the highest vacancy rate among the states and territories at 2.2%, up slightly from the previous month. On the other end of the spectrum, Perth and Adelaide continued to report some of the lowest vacancy rates at 0.7%, reflecting the ongoing tightness in these markets. Darwin, too, saw its vacancy rate drop from 0.9% in June to 0.7% in July, tightening the market further in the Northern Territory. Hobart, meanwhile, experienced a drop in its vacancy rate from 1.5% in June to 1.2% in July.
Nationwide, the total number of rental vacancies slightly decreased to 39,701 residential properties, down from 40,486 in June. However, this figure remains higher than the 38,864 vacancies recorded in July 2023, showing that while some areas are easing, the overall market remains competitive.
In the Sydney CBD, the vacancy rate jumped from 5.0% in June to 5.5% in July, suggesting a changing landscape in this high-demand area. Melbourne’s CBD saw a slight decrease in vacancy rates, dropping from 4.3% in July 2023 to 4.0% in July 2024, indicating a slight uptick in demand for rental properties in the city centre. Brisbane’s CBD, on the other hand, continued to experience strong demand, with a low vacancy rate of 2.5%, while Canberra’s CBD saw a dramatic decrease from 4.0% in July 2023 to 2.7% in July 2024.
These figures suggest a market in flux, where some cities and regions are experiencing easing pressures, while others remain as competitive as ever. The recent declines in asking rents are significant, but they’re small compared to the sharp increases seen since 2021. The rental market, which has been under intense pressure due to rising rents and low vacancies, is showing signs of stabilising, but the broader rental crisis is far from resolved.
Louis Christopher, Managing Director of SQM Research, noted that the declines in capital city rents are the largest since the onset of Covid-19. He pointed out that while these falls are widespread, they’re still minor compared to the dramatic rises in recent years. The ongoing low national rental vacancy rate of 1.3% indicates that the rental crisis is still present, even as the market begins to level out.
For tenants, these changes might bring a bit of breathing room, particularly in cities where rent hikes have been relentless. However, the overall picture remains one of a market in transition, with different regions experiencing varied dynamics. The recent dips in rent might offer some short-term relief, but they don’t signal an end to the broader issues plaguing Australia’s rental market. Instead, they highlight a market that’s adjusting to new conditions, influenced by factors like population shifts, economic changes, and the ongoing impacts of the pandemic.
As Australia continues to navigate this evolving landscape, the rental market will remain a focal point for both tenants and investors. The recent trends in rents and vacancies offer a glimpse into a market that’s adapting to changing circumstances, with potential implications for everyone involved. Whether these trends will continue or reverse in the coming months is still uncertain, but for now, some renters in Australia’s major cities can breathe a little easier.
