Rents still rising across Australia; units nearly as expensive as houses in Sydney, Melbourne and Brisbane

The Domain Rent Report, released on Thursday, revealed that seven of the eight capitals had record median rents for houses and units for the March quarter.

Nationally, house rents have risen by 10.5 per cent over the past year, while units have grown by 12.7 per cent.

Sydney remains the most expensive capital city in which to rent a house, with the median asking rent rising by $20 a week over the past three months to $750 a week. Unit rents are not far behind, also growing by $20 to a median of $700 a week.

Only Hobart and Darwin have seen stabilisation in their house rent markets, with no movement over the March quarter. 

Elsewhere, demand has been unable to keep up with supply as Australia experiences record-high migration.

Domain’s chief of research and economics, Dr Nicola Powell, says many people coming from overseas prefer apartment living to be closer to the city. This demand for units has narrowed the gap between unit and house rents, especially in big cities like Sydney, Melbourne and Brisbane. The demand for apartments will push up rents due to the lack of supply.

“Units tend to be centrally located. They’re in the CBDs. They’re close to major working hubs and infrastructure hubs, whereas houses will be typically in your outer or in your middle suburbs,” she says.

Typically, the start of the year is the busiest time in the rental market, and a major contributing factor is the start of the new university year as students look for accommodation. This is usually referred to as the “changeover period”.

“The reason we knew that this was going to be a stronger quarter is the changeover period. When we reached the latter part of last year, we knew it would be the most competitive changeover period Australia had ever experienced.

“The pace of rental growth really accelerated in some cities. It’s questionable whether it’s outside of that seasonal trend. Mostly, we are seeing slower rates of rental growth over the quarter compared to what we saw at the peak [in 2021-23], where we were seeing those strong rates of growth.”

But the bottom line is that rents have gone up dramatically – even if the rate of growth is slowing – and Australia’s rental market still favours landlords, making it challenging for tenants to find a place to live.

Sydney renter Anna Huynh attended a rental inspection for a one-bedroom apartment in Annandale. On inspection day, more than 30 groups were present.

“We loved it and didn’t want to continue spending weekends going to different places. So, we decided to offer $50 extra a week and hope for the best. And yeah, we’re ‘lucky’,” Huynh says.

The apartment was initially listed for $650 a week, but now Huynh, 25, pays $700 a week (Sydney’s median rent) because she felt that offering more money was the only way to secure a place to live with her partner.

“I could only pay up to $400 by myself; $700 is a bit too much for one person,” she says.

Even though Huynh splits rent costs with her partner, she has found herself cutting back on different expenses to ensure she can keep up with the rent payments.

She’s also taken out a credit card with rewards to “make money spent worth it” since she can’t save as much. She hopes she can get enough points for flight discounts.

Tenants having to offer more money than the original asking rent has been a common occurrence, and some governments have passed laws to prevent rental bidding from occurring.

Despite the record rent rises across the country, Powell is optimistic that the market will reach a tipping point sometime this year. 

“Some sub-markets will operate with more balance, and rent growth will slow—some areas already show these signs,” she says. “We are seeing the number of prospective tenants per rental listing ease, suggesting some pressure has been lifted.”

Sydney

Sydney is back to being the most expensive city in Australia in which to rent a unit or a house, a title previously held by Canberra this time last year.

The median asking rent for a house is $750 (up 2.7 per cent in the quarter), and the median weekly rent for a unit is $700 (up 2.9 per cent in the quarter).

“Despite the continual rise, quarterly [house] rental growth remains slower than in mid-2022 to mid-2023,” says Powell. 

She says that unit rent growth has also lost momentum compared to the March quarter of 2023.

Melbourne

Melbourne was once the cheapest place in Australia in which to rent a house in Australia, but rents went up by 3.6 per cent over the March quarter, putting the median asking rent at $570. However, it is still much cheaper than Sydney ($750) and Brisbane ($620).

“Melbourne didn’t see strong rates of rental growth as early on as the other capital cities. Rents grew at a much faster rate in other capital cities,” says Powell.

“Rent growth for Melbourne happened more over 2023, and we’ve seen another strong quarterly growth this quarter.”

Melbourne units saw quarterly growth of 5.8 per cent, one of the highest rates of growth across the nation, putting the median rent at $550 a week.

Brisbane

Asking unit rents in the Sunshine State’s capital grew 5.4 per cent in the last quarter and by a massive 18 per cent over the past year, pushing rents up to $590 a week.

“This makes Brisbane the second most expensive city to rent a unit, a turnaround considering the city was the fourth most affordable just five years ago,” says Powell.

The median weekly rent for houses increased by 3.3 per cent over the quarter and by 10.7 per cent over the year to a median of $620 a week. Despite this, Powell says quarterly growth is still lower than its peak of 2021-2022.

Brisbane tenants are now paying $60 extra a week to rent a house and $90 a week to rent a unit compared to this time last year. 

Adelaide

Adelaide’s rent growth has risen for the 15th consecutive quarter, pushing the median house rent to $590 weekly.

“Adelaide has actually seen quite a long stretch of continuous rental growth. And I think that jump for house rents of 5.4 per cent in one quarter is hefty,” says Powell.

At the same time, units saw a smaller quarter increase of 2.2 per cent quarterly growth, with the median rent for a unit now at $460 a week.

Perth 

Perth house and unit rents have grown for the 10th consecutive quarter, putting rents at $650 and $550 per week, respectively. 

Unit rents increased by 5.8 per cent in the last quarter, with a record 22.2 per cent annual change. Growth in house rents went up by 4.8 per cent in the quarter and had a yearly increase of 18.2 per cent. 

“The level of housing demand, I think, took many people by surprise in terms of strong levels of overseas migration and also positive demographic trends coming from instate. This means that more people are arriving into WA than leaving, and that is weighing on housing demand,” says Powell.

Powell says it’s currently one of the most competitive cities for tenants, alongside Adelaide, with some of the tightest vacancy rates.

“The rental market is just eye-watering. Perth has a 0.3 per cent vacancy rate, and you know, it is pretty much impossible for somebody new to Perth to be able to find a vacant rental.”

Canberra

Canberra was once the country’s most expensive city for tenants wanting to rent a house. However, it lost its position in June 2023 and experienced a short period of falling asking rents. 

“Canberra is the only city to see house rents fall annually, although the rate of decline continues to ease,” says Powell.

In the last two quarters, house and unit rents increased after two years of almost no growth. Units are now at a new high of $570 a week and saw quarterly growth of 1.8 per cent.

Powell says Canberra is now the third-most expensive city to rent an apartment after being overtaken by Brisbane.

Despite quarterly rental growth, Canberra has the highest vacancy rate, at 1.4 per cent, making it the most favourable tenant market.

Hobart

Hobart house rents remain steady at $550, while units increased by 2.2 per cent over the March quarter and now sit at $460. It also received the crown of the most affordable capital city for renting a house after sharing it with Melbourne for several quarters.  

“Hobart is also the only capital not to have record unit rents,” says Powell. Instead, despite the quarterly growth, it saw an annual decrease of 3.9 per cent.

Darwin

House rents held steady in Darwin at $650, while unit rents increased by $10 to $550 (up 1.9 per cent over the March quarter). The median asking rent for a house remained unchanged over the past year, while the unit median rose 4.8 per cent.

“For the first time in 10 years, unit rents are back to a median high of $550 a week, last seen in 2014,” says Powell. “Unit rents rose for the second consecutive quarter, but the pace of growth halved compared to the previous quarter.”