National rents rose 1.7% over the March quarter, up from 0.4% in the December quarter, according to CoreLogic’s latest Quarterly Rental Review.
However, this uptick is largely seasonal, with the with the 1.7% rise in rents over the three months to March marking the slowest Q1 growth since 2019 (1.0%) and is a full percentage point below the 2.7% lift seen this time last year.
While rental values experienced a seasonal boost, CoreLogic Economist Kaytlin Ezzy said the underlying trend remains one of moderation.
“Rental growth is still tracking above the pre-COVID-19 decade annual average of 2.0%, but the rate of change has slowed considerably. At 3.8%, the 12-month change is now less than half the recent 8.3% peak recorded over the year to March 2024,” Ms Ezzy said.
“The further increase in the average household size due to worsening affordability, along with the slowing in population growth, continues to put downward pressure on rental demand and, subsequently, on rental value growth.”
Despite the easing in demand, advertised rental listings remain well below average. Around 99,000 rental properties were listed for rent nationally over the four weeks to 6 April, -22.1% below the historic norm for this time of year.
As a result, vacancy rates tightened to 1.6% in March, down from 2.0% in December and just 10 basis points above the record low seen in March 2024.
High-density sector drives quarterly uptick
The March quarter increase was largely driven by units, which rose 2.3% nationally compared with a 1.4% rise in house rents, reversing the recent trend where houses consistently outperformed units.
“The renewed growth in unit rents is likely linked to the seasonal lift in demand from international students who typically favour higher density housing,” Ms Ezzy commented.
Additionally, the preference for house rent over the past year has widened the gap between median house and median unit rental values, from $38 in June 2023, to $47 in March.
“While still below the $71 gap recorded at the end of 2021, the expanding of the house rent premium has eroded some of the relative affordability advantage that some renters have gained by forming larger share houses.”
Across the capitals
Across the capitals, Hobart led the charge with a 2.3% increase in dwelling rents over the March quarter. Perth (2.2%), Brisbane (1.9%) and Adelaide (1.8%) also posted solid gains.
Sydney and Melbourne saw some of the biggest turnarounds in momentum. After recording quarterly declines in December, both cities rebounded, with rents up 1.4% and 0.8%, respectively. Darwin recorded the softest result, with rents rising just 0.3%.
On an annual basis, Perth continues to lead with rents up 6.3%, followed by Adelaide (5.5%) and Hobart (4.6%). Canberra recorded the smallest increase at 1.6%, or an additional $10 per week.
Despite the recent quarterly rise, Hobart remains the most affordable rental capital, with a median weekly rent of $574. Sydney remains the most expensive, with a median weekly rental value of $781.
Rental growth to remain subdued
While the seasonal uptick in rents offers some short-term momentum, Ms Ezzy said the broader trend of moderation is likely to persist amid weakening demand.
Since March 2020, national rents have climbed 38.4% – the equivalent of an extra $182 per week or $9,442 annually. This significant increase has prompted many households to adapt by forming larger households, particularly in capital cities.
“With affordability stretched, many renters are adjusting by staying in shared accommodation or delaying independent living, which in turn reduces net rental demand,” Ms Ezzy said.
Additionally, recent migration data also points to easing demand, with net overseas migration in the year to September 2024 coming in at just under 380,000 people – more than 30% lower than the previous year’s peak.
"Given the easing in demand, it’s likely rental growth will remain relatively subdued over the coming quarters, even in the face of tight supply,” Ms Ezzy said.
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