CoreLogic’s Housing Market Update Report for February includes interesting data on Australia’s rental market, which is rebounding strongly from the soft conditions evident between 2018 and 2020.
As illustrated in the next chart, rental growth nationally rebounded to 2.5% in the year to January 2021:
Rental markets are tightening across most areas of Australia – the key exceptions being the major cities of Sydney and Melbourne, which are being hit hardest from the collapse in immigration:
Regional areas are experiencing especially fast rental growth, growing by 6.3% in the year to January versus just 1.2% growth across the combined capital cities (weighed down by Melbourne and Sydney).
Separate data from CoreLogic also shows that detached houses are experiencing much faster rental growth than units:
We expect these trends to continue. Melbourne and Sydney are way oversupplied with apartments, and immigration is unlikely to rebound until next year. Thus, these two cities – and the apartment market in particular – will continue to experience softer rental growth than the rest of the nation.
At the same time, demand for regional homes will likely remain strong due to the work-from-home phenomenon, which looks like structural shift in the labour market.
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