Rents across regional Australia rose more than in the capital cities over the past year as an influx of new apartments flooded the major housing markets, new figures show.
Combined capital city rents fell by 0.4 per cent over the December quarter to remain unchanged year on year, property data firm CoreLogic’s latest quarterly rental review revealed.
By contrast, the combined regional markets saw rents spike 0.3 per cent in the final quarter, increasing by a total of 1.8 per cent in 2018.
The median weekly rent for combined regional areas is $373, compared to $462 for the combined capitals.
The surprising results are due to an influx of apartment stock in the two major cities that caused rents to fall in Sydney, and a “fairly significant slowdown” in rental price growth in Melbourne, CoreLogic found.
Darwin, where the property market has been in free fall since the end of the mining boom, was the only other capital city to experience an annual decline, with rents falling by 5.8 per cent to a median weekly rate of $463.
“Darwin rents have been falling for many years and they continue to decline,” CoreLogic research analyst Cameron Kusher said.
Nationally, rental rates rose by 0.5 per cent over the 2018 calendar year, their slowest rate of growth since 2005.
Annual national rental growth has been slowing since it peaked at 3 per cent in July and August 2017.
The sluggish figures highlights a “general slowdown” in the rate of rental growth that is “more prevalent in the largest capital cities than regional housing markets,” Mr Kusher said.
“The slowing rent potentially points to stretched rental affordability, in Sydney and Melbourne particularly, and the effect of a large increase in housing supply and investor purchasing over recent years coupled with reduced rental demand as renters transition to first-time home buyers taking advantage of stamp duty concessions available in New South Wales and Victoria,” he said.
Australia’s most expensive city
Sydney remained Australia’s most expensive city for tenants, despite rents falling by 3 per cent in 2018.
Australia’s most populous city now has a median rent of $583 per week, $43 more than the second most expensive city for tenants, Canberra, where the median weekly rent is $539 after a 5.3 per cent rise in 2018.
Rents in the nation’s second biggest housing market, Melbourne, rose by 2.4 per cent in 2018, with the median weekly rent now $451 per week.
“Sydney and Melbourne are both seeing the impact of significant demand from investors over recent years, along with a substantial ramp up in new housing supply (largely apartment), much of which was purchased by investors,” Mr Kusher said.
The “weaker” rental market conditions in the major cities are forecast to continue with a “high volume” of new housing in the pipeline due to hit the market in coming years.
Brisbane and Perth bounce back
Brisbane and Perth were the only two capital cities in which the annual change throughout 2018 accelerated relative to the change in 2017, CoreLogic found.
“The past year has seen a change of direction for both the Brisbane and Perth rental markets. Following a number of years of declines, rents are now rising again,” Mr Kusher said.
Rents were up 2 per cent annually in Perth, the capital’s strongest growth since July 2013.
In Brisbane, rents increased by 1.5 per cent, the city’s strongest growth since July 2013.
Australia’s most affordable city
Adelaide remained Australia’s most affordable city with a median weekly rent of $381 following a 1.5 per cent rise in 2018, the report found.
Hobart, historically Australia’s most affordable housing and rental market until prices began skyrocketing in recent years, is now more expensive than Adelaide, Perth and Brisbane.
The median weekly rent in the Tasmanian capital is $433 following a 5.8 per cent rise in 2018.