CoreLogic’s latest Rental Pulse reports that the unprecedented lift in overseas migrants and foreign student arrivals, combined with a chronic shortage of rental listings, has resulted in the highest yearly rental increase on record for Australia’s capital cities.
CoreLogic’s national home rental index increased 0.8% in April, 2.8% over the quarter, and by 10.1% year on year.
The combined capitals’ annual rental increase of 11.7% set a new record, and was mostly driven by rising demand for capital city apartments, according to CoreLogic.
The mismatch between supply and demand remains the primary cause behind soaring capital city rents.
The total number of capital city rental postings was 20.9% lower than this time last year and 39.8% lower than the five-year average over the four weeks ending April 30th.
Unit rental growth in major cities continues to outperform house rental growth, with 1.6% and 0.9% increases in April, respectively.
The higher growth in the unit sector reflects both significant demand from migrants and international students, who often settle in medium to high density housing, and a preference for cheaper housing, according to CoreLogic.
Sydney and Melbourne continue to experience the highest growth rates in unit rents among the capital cities. Both cities reached a new peak rate of growth in both quarterly and annual trends in April.
The rolling quarter increase in Sydney unit rents was 5.8%, while the year to April increase was 19.1%.
Melbourne’s unit rents increased 5.0% over the quarter and by 15.2% year on year.
CoreLogic believes renters are unlikely to see any relief in the short to medium term, with the flow of migrants predicted to stay high and rental availability expected to remain low.
Given the flow of new unit approvals has remained below average since 2018, the rental market is likely to face supply constraints over the medium to long run.
