CoreLogic’s December housing market report showed that rental growth nationally decelerated to 8.3% in 2023, down slightly from the 9.5% rise recorded in 2022:
Source: CoreLogic
As shown above, rental growth nationally was driven by the five major capital city markets, while unit rental growth (10.2%) outpaced house rental growth (7.5%) in 2023.
CoreLogic’s Tim Lawless expects rents to grow at an above-average pace in 2024, given population demand will continue to outpace supply.
However, affordability limits will likely see Australians continue to move into share housing to ameliorate the pressures.
“Considering we are yet to see any material response in rental supply, growth in rents is likely to remain above average in 2024″, Lawless said.
“However, we could well see a further slowdown in rental growth as affordability pressures drive structural changes in rental demand”.
“This could include a lift in average household size, as group households reform and multi-generational households becoming more common”, he said.
Recent data from the ANU’s Ben Phillips showed that the number of adults per Australian dwelling has lifted back to pre-pandemic levels:
Source: Ben Phillips (ANU)
“Persons per dwellings (adults) looks to be increasing – roughly lowering demand for housing by about 100,000 dwellings since mid-2021”, Phillips noted via X (formerly known as Twitter).
Indeed, new analysis from independent economist Tarric Brooker shows that “despite a far larger construction sector in per capita terms, Australia has fewer homes per person than the U.S”.
“Meanwhile, the ratio of Australians per dwelling is actually well above where the pre-Covid trend would have implied”.
“We just can build new homes fast enough”, according to Brooker:
Source: Tarric Brooker
Recent data from Flatmates.com.au revealed that demand for share housing continues to rise.
“2023 has been Flatmates.com.au’s busiest year on record. It’s clear more Australians are turning to share accommodation as pressures on the rental market and a cost-of-living crisis fail to die down”, Flatmates.com.au Community Manager, Claudia Conley said.
Given net overseas migration is forecast to remain at historically high levels in 2024 at the same time as actual dwelling construction rates continue to fall, Australia’s rental crisis will inevitably worsen.
Australians will inevitably respond by moving into share housing to ameliorate the pain.
