The suburbs where rents have increased the most
Renters are now forking out record-high prices following double digit-growth across many parts of the country, a new report released earlier this week has revealed.
Rental prices for houses (up 12%) and units (up 12.2%) rose substantially across Australia's capital cities in the 12 months to June 2022, according to Domain's quarterly Rental Report, which helped contribute the fastest annual growth rate recorded by Domain since 2008.
In dollar figures, median weekly rents across the combined capital cities jumped from $460 to $515 over the past year.
That will likely have come as a boon for landlords, but for those who are renting, it equates to an extra $2860 a year which they will have needed to find in their budgets.
Around a third of households rent their homes, the latest Census data from the Australian Bureau of Statistics shows, meaning millions of Australians will have been hit with rent hikes over the past year at the same time as other living costs have grown.
So, what's behind these steep increases? The chief of economics and research at Domain, Dr Nicola Powell, says that there are a variety of factors at play.
"The numbers that we're seeing are a result of a combination of high purchasing prices locking people into the rental market longer, increased home loan costs being passed onto tenants, weaker investment activity throughout 2019-20, fewer building completions, greater household formation, investors cashing in on the recent price boom, and rental demand being boosted by the return of international students and overseas migration."
Brisbane, Sydney and regional areas record largest rises
As you would expect from such a substantial combined capital city price jump, rent has become more expensive across all capitals, but some increases have been more substantial than others.
Renters in Brisbane have been hit with the steepest rent hikes out of all the capital cities, with the median rent for homes soaring 16.9% over the year to $520 and the median rent for units rising by 12.5% to $450.
The surge in rental prices for houses in Brisbane, Domain suggests, is a product of the demand created by younger families relocating to the city which has then flowed through to units because of the limited housing stock available. More demand has also been created by the return of international students following the re-opening of international borders.
Following Brisbane, renters in Sydney have been hit with some of the highest increases, as the weekly median rent on a home in the nation's largest city jumped by 12.7% to $620 in the 12 months to June 2022. The rise in the median rent for units was not far behind, going up 11.7% to $525 over the year and rising 5% in the last quarter alone.
The report also revealed the challenges being faced by renters outside of the capital cities. The median weekly rent for a house in regional areas rose by 12.9% annually to $480, while for units the rate of increase was even stepper at 14.3%, meaning median weekly rent is now $400.
Coolgardie (up 39.5%) and Broome (up 37.9%) in Western Australia, Bundaberg (up 22.9%) in Queensland and Cessnock (up 20%) in New South Wales recorded the largest increases in the regions.
Affordability improves in some areas
While the overall rent picture has been one of considerable price rises over the past year, Powell notes that there were a few suburbs which bucked the trend.
"Despite rents hitting a new record high across the combined capitals, we have seen suburbs report improved rent affordability, such as Birmingham Gardens (NSW), MacLeod (VIC) and Middleton (SA)."
Birmingham Gardens in Newcastle recorded the largest fall of any suburb with a 22.6% decrease in the median weekly rent of a unit, followed by MacLeod in Melbourne where unit prices dropped by 17.2%. Meanwhile, Rossmore in south-west Sydney notched a 15.4% drop in the median weekly rent of a home.
"While it is still a very competitive market, increased investment activity has helped to ease some pressure on tenants with national vacancy rates holding for the fourth month and the choice of rentals nudging higher over June," says Powell.
"This, together with new first home buyer government incentives such as 'Help to Buy', has the potential to assist the transition of more tenants becoming homeowners, easing some of the demand pressures that the rental market is currently facing."
Given the reality of rising prices in most markets, existing tenants or those looking to rent may find it useful knowing when and by how much landlords can increase your rent - though it's worth noting that there are differences between states and territories.
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