CoreLogic has released rental data for May, which shows that rents across the major capital cities continues to rise at a blistering pace amid record tight vacancies.
The vacancy rate across the combined capital cities was just 1.0% for units and 1.1% for houses in May:
Source: CoreLogic
House rents continue to rise at a near double-digit pace across the major capital cities:
Source: CoreLogic
Whereas unit rents are literally exploding, rising at mid-to-high teens across the four largest capital cities:
Source: CoreLogic
Commenting on the results, CoreLogic’s research director Tim Lawless noted that unit rents across the larger capital city markets are rising at a “blistering speed”.
“Sydney unit rents were up 5.7% over the past three months, Melbourne and Perth unit rents rose 5.2%, and in Brisbane unit rents have increased by 3.8% over the rolling quarter”.
Lawless attributes the hyperinflation to rapid arrivals of international students and migrants, who tend to rent units.
“There is the additional demand for higher density styles of rental accommodation linked to the return of foreign students and overseas migrants, with regions popular with recent migrant arrivals tending to be higher density”, Lawless said.
“Rental demand in inner-city precincts may [also] be seeing an increase in popularity as workers return to the office and CBD’s become more vibrant”.
Lawless also doesn’t see any relief on the horizon.
“While rental demand remains high, we aren’t seeing much sign of a supply response. Capital city rental listings were -36.4% below the previous five-year average at the end of May, and vacancy rates are holding around the 1% mark for both houses and units”.
The next chart summarises the reality of the situation:
Australia is projected to experience record population growth of between 400,000 and 500,000 people a year, mostly via record net overseas migration.
At the same time, dwelling construction is falling due to widespread insolvencies across the industry, soaring materials costs and skyrocketing interest rates.
Dwelling approvals have already collapsed to a 13-year low, and Treasury secretary Steven Kennedy told Senate Estimates this week that the downturn in dwelling approvals is expected to continue until 2025, with investment in new dwellings likely to contract by 2.5% this year and a further 3.5% in 2023‑24 and 1.5% in 2024‑25.
Growing Australia’s population by between 400,000 and 500,000 people a year amid falling dwelling construction necessarily means Australia’s housing crisis will worsen, resulting in higher rents and increasing homelessness.
