The Australian rental market has experienced its slowest growth in four years, with CoreLogic’s monthly Chart Pack showing a modest 0.1% increase in national rents during July.
CoreLogic Australia economist Kaitlyn Ezzy said the easing in the monthly growth trends marks a stark contrast to the 39.7% surge in rents recorded over the past five years.
Ms Ezzy said the slowdown was a positive sign for renters, who have faced a significant increase in median weekly rental payments—up by approximately $180 over the past five years.
“July’s small rise in national rents signals a broader cooling trend across the country and will provide some renters a much-needed respite after years of high demand and steep increases,” she said.
Results were varied across the country with rents rising 0.6% in Adelaide and 0.3% in Melbourne and Perth, while remaining flat in Darwin and Canberra. In contrast, rents have declined in Sydney (-0.1%), Brisbane (-0.1%), and Hobart (-0.3%).
“The varied rental growth across capitals highlights an affordability ceiling in major cities. With tenants unable to borrow more to cover rent, many are turning to alternatives such as shared housing, relocation to more affordable areas, or leaving the rental market altogether and buying their own homes,” she said.
At an annual level, CoreLogic’s Rental Value Index recorded the smallest 12-month change in three years, with national rents up 7.8% in the year to July, down from a recent peak of 8.6% in April.
This slowdown is largely driven by a reduction in growth rates in the capitals, from 9.7% in February to 8.0% in July, while regional areas have seen growth accelerate from 5.4% to 7.1% over the same period.
Perth recorded the strongest rental growth, with annual rents increasing by 12.7% followed by Regional WA at 10.6%.
“Regional areas are benefiting from lifestyle changes, relative affordability, and migration trends,” Ms Ezzy said.
“The high cost of renting is also likely to be motivating more people with the financial means to service mortgage repayment and job security, to buy their first home, and we’re also seeing investors take notice too.”
Lending to first-home buyers rose 1.5% to $5.3 billion in June, to comprise 29.2% of new owner-occupier finance.
Similarly, new housing lending increased in June, up 1.3% to $29.2 billion, driven by a 2.7% rise in investor lending, with investors motivated by capital gains rather than high rental returns.
Despite an easing in net overseas migrations and a deceleration in rental growth, substantial relief for the rental market seems unlikely in the short term.
“Low supply will likely continue to put upward pressure on rents, albeit at a slower pace,” she said.
“With dwelling approvals and commencements at historic lows, providing sufficient new housing will not be a quick fix and remains a genuine challenge for policymakers, the property industry and of course tenants.”
Other highlights from the August Housing Chart Pack include:
- CoreLogic estimates the combined value of residential real estate rose to $10.9 trillion at the end of July.
- National home values eased to 1.7% over the rolling quarter, down from a cyclical high of 3.3% recorded through the June quarter of 2023.
- Sydney, Brisbane, Adelaide and Perth dwelling values are all currently at a record high. Perth had the highest monthly dwelling value increase in July at 2.0% taking its annual increase to 24.7%. Brisbane had the second-highest annual increase of 16.0% followed by Adelaide at 15.5%.
- Annual transaction volumes appear to have moved past a peak with CoreLogic estimating 511,211 sales in the 12 months to July, down from 513,014 over the year to June. Despite the month-on-month decline, transactions are 9.3% higher than last year and 5.1% above the five-year average.
- Days on market has increased to 33 days in the three months to July, up from a low of 27 days in the three months to April. Longer selling times in Sydney, Melbourne and Hobart are driving the increase.
- Vendor discounting trended slightly higher in July to 3.7%, up from 3.6% in June, reflecting the market slow down and vendor need to negotiate more to secure a sale.
- In the four weeks to 4 August, new listings totalled 36,973 nationally, 1% higher than the same time last year and 7.7% above the historic five-year average.
- Total listings remain steady during the traditionally quiet winter period, suggesting steady demand, with 136,135 properties listed nationally in the four weeks to 4 August.
- Total advertised listings in Western Australia, South Australia and Queensland remain below the same time last year, with limited supply supporting value growth.
- Listing levels in Victoria and Tasmanian continue to accumulate contributing to softer market conditions.
- Auction clearance rates averaged 64.2% in July, in line with June’s figures but slightly weaker than the 10-year average of 65.6%.
- Growth in rent values slowed to 7.8% in the 12 months to July, the slowest annual change in three years as capital city demanded eased.
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CoreLogic Australia