Australia’s rental market broke records towards the end of 2023, new research shows.
Corelogic Head of Research Eliza Owen announced this week that the national median rent value lifted to $601 per week in December, or $31,252 a year.
CoreLogic’s median rent calculation is based on a current estimate of rent income, that is, what the median dwelling in Australia would rent for on the market at any given time. The $601 median is a series high, and coincides with total annual rent increases of 8.3% nationally.
Owen notes that the median has increased markedly from $437 per week in August 2020, pushing annual rent values up by more than $8,000 in that time.
How did we get here, she asks.
“Recent growth in rent values, which averaged 9.1% a year for the past three calendar years, stands in stark contrast to the average annual growth rate of 2.0% in the 2010s”, Owen says.
“Since the onset of the pandemic several factors have contributed to unusually large rent rises, including:
– A notable decline in the average household size from late 2020, partly driven by a reduction in share housing – meaning more dwellings were needed even when population growth was close to zero in 2021.
– A rapid increase in the Australian population from late-2022 as international border restrictions were lifted.
– A temporary shock to investment housing activity between May 2022 and February 2023 as interest rates rose. Investor activity has picked up markedly since, but there is still a lot of catch up required in establishing new rentals.”
Owen believes that longer-term factors have also increased demand, such as a reduction in social housing supply together with a declining rate of home ownership and a dearth of supply generally.
“Average household size has also been gradually declining over decades due to economic and demographic factors (for example, more people living alone), requiring more dwellings to house a given population”, she says.
Median rents across the capital city markets ranged from $745 per week in Sydney, to $535 per week in Hobart. Canberra and Hobart were the only markets to see a decline in rent values through 2023, at -1.9% and -3.5% respectively.
