Rental listings reach new low

The number of homes available for rent across the country has reached a new low according to the latest quarterly rental report published by PropTrack.

The report, which analysed homes listed on realestate.com.au, revealed that the number of new rental listings in December was 4.6% below the figure recorded in 2022 and 20% lower than the decade average for December.

As a result, the total number of listings available also hit a record low - down 4.7% on the December 2022 figure and 30% below the 10-year average.

"We're seeing extremely low volumes of both new listings and total rental listings," says Cameron Kusher, director of economic research at PropTrack.

"For anyone looking for rental accommodation there's currently a lot of competition and there's not much choice. So, firstly, that's making it hard to find somewhere, but equally, it's giving landlords the scope to lift rents."

So what's behind the lower volume of properties currently available for rent on the market?

Kusher says there are a few causes, the first being a trend which took place during the pandemic in which many renters, particularly in inner-city Melbourne and Sydney, left share houses for homes of their own and never looked back.

"The second factor is that migration to Australia has ramped up really quickly over the last couple of years to the point where we're basically back to where we would have been had we never shut the borders. So that's put a lot of pressure on the rental market.

"And thirdly, we used to see a lot of one and two-bedroom apartments built specifically for investor buyers, but if we look at what's been built over the last few years it's typically owner-occupier stock. So we're not getting that additional supply of rentals coming through with new apartment projects."

Perth and Melbourne rents skyrocket

Finding a property is one hurdle for renters, the other is the affordability of the rent.

Over the course of 2023 the median asking rent in Australia rose by 11.5% to $580 a week, though this was actually a slower rate of growth than the 15.6% increase recorded during 2022.

Price growth also varied dramatically across the country. In the country's five largest capital cities median asking rents rose between 9% and 20%.

"Sydney, Melbourne, Brisbane, Adelaide and Perth have all seen double-digit rental growth, and that's really been driven by very low supply levels," says Kusher.

"In each of those cities the number of properties available for rent is pretty much at a record low and they're also the cities that attract most of the migration into the country as well."

The story is different in Canberra and Hobart though - the former which didn't see any rental price movement over the year, and the latter which recorded a 4.8% drop.

"If you look at Canberra there's actually been quite a lot of construction of apartments over the last period and we've also not seen the inflow of people to the ACT be quite as strong," Kusher explains.

"Equally in Hobart we haven't seen much in the way of price growth - in fact, rents are lower over the year. Part of this is that migration has really slowed, but Hobart's also had a phenomenal run of strong rental price increases in the past five or six years, so I think people just don't have the capacity to pay."

Will rent prices keep rising in 2024? 

After two years of considerable increases there are signs that price growth is starting to ease, as PropTrack found that the growth rate over the December quarter was just 1.8%.

Kusher does expect rents to continue to edge higher throughout the year though - by double digits in some cities.

On the one hand he says that the lack of competition on the rental market means that landlords will still have the ability to raise rents, but that will be tempered by the fact that many renters will be reaching the end of their tether in terms of what they can afford.

"I think, increasingly, people just aren't going to have the capacity to pay the prices that people are seeking for rent. But the tightness of the rental market means that landlords still have an awful lot of scope to put up rents."

"People are going to have to keep rationalising their rental choices - so moving into a smaller house, moving further away than where they'd want to be, moving into a smaller apartment or into a share house, just to try and save."

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