There are early signs of relief for struggling renters, with a new report showing vacancy rates have started to increase in most capital cities over the past three months.
The Real Estate Institute of Australia (REIA) Real Estate Market Facts (REMF) Report found there was a small increase in the number of available rental properties across the country, however, the vacancy rate is still at 1.5 per cent – well below 3 per cent, which is considered a healthy market.
According to the report, Darwin returned to a 3 per cent vacancy rate over the quarter, the only city in Australia to reach that level.
Vacancy rates in Canberra increased to 2 per cent, Hobart to 1.8 per cent, Sydney to 1.5 per cent, Brisbane to 1 per cent and Perth to 0.8 per cent.
Adelaide recorded the lowest vacancy rate in Australia at 0.6 per cent, while bucking the trend was Melbourne, where vacancy rates decreased to 2.1 per cent.
The tight rental conditions continued to put upward pressure on rents.
The weighted average median rent for three-bedroom houses in the eight capital cities increased to $553 per week, a quarterly increase of 3.2 per cent but an increase of 9.9 per cent in the past year.
The weighted average median rent for two-bedroom other dwellings increased to $563 per week, a quarterly increase of 3.6 per cent and an annual increase of 18.7 per cent.
REIA Deputy President, Leanne Pilkington said rents continued to rise driven by high demand, hot competition and lack of supply.
“The median rent increased in Sydney, Melbourne, Brisbane, Adelaide and Perth but decreased in Canberra, Hobart and Darwin,” Ms Pilkington said.
“The weighted average median rent for two-bedroom other dwellings increased to $563 per week, a quarterly increase of 3.6 per cent and an annual increase of 18.7 per cent.
“The median rent for three-bedroom houses also increased in Sydney, Melbourne, Brisbane, Perth and Darwin, remained stable in Adelaide, but decreased in Canberra and Hobart. Perth had the highest quarterly increase of 6.8 per cent.”
Across the regions, rental conditions remained tight, Ms Pilkington said.
“In terms of rents, strong rental price growth was experienced in Newcastle with 2-bedroom homes up 8 per cent while in Wollongong two-bedroom house rents were up 10 per cent,” she said.
“Alice Springs rents increased 5.5 per cent for three-bedroom houses, Townsville two-bedroom houses 2.6 per cent, and South Australian region capitals of Mt Gambier increasing a significant 51 per cent and Port Lincoln 21.2 per cent for three-bedroom houses.
“Broome rents for a three-bedroom home increased 28.2 per cent in the past year.”
Rising rents also make yields more attractive to investors.
Annual yields for three-bedroom houses across Australia sat at 1.8 per cent in Sydney, 2.1 per cent in Melbourne, 2.7 per cent in Brisbane, 3 per cent in Adelaide, 4 per cent in Perth, 2.7 per cent in Canberra, 3 per cent in Hobart and 4.5 per cent in Darwin.
Annual yields for two-bedroom other dwellings across Australia were significantly stronger in Sydney (3.8 per cent), Melbourne (3.5 per cent), Brisbane (4 per cent), Adelaide (3.5 per cent), Perth (5.3 per cent), Canberra (4 per cent) Hobart (3.4 per cent) and Darwin (5 per cent).
Ms Pilkington said home sales in the cities continued to be strong despite challenging lending and economic conditions.
“The median house price for the eight capital cities increased to $977,236 over the quarter but declined 3.4 per cent over the year,” she said.
“The median house price increased in Sydney, Brisbane, Adelaide, Perth, Hobart and Darwin, but declined in Melbourne and Canberra.”
Increases ranged from 5.3 per cent in Sydney to $1,538,017 to 0.9 per cent in Darwin to $565,000.
Ms Pilkington said it was more important than ever to get housing policy settings right on the back of the ongoing rental crisis.
“National Cabinet has rejected rent freezes and controls; inflation had returned to the RBA’s target band with the cash rate on hold; and the Housing Australia Future Fund is set to pass Parliament,” she said.
“A return to a more moderate economic and political outlook will ease pressures on our housing system, which we hope to see bear out in future quarters.”