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Exploring the Surge in Australia’s Rental Market in 2024

Source: CoreLogic

Australia’s rental market has experienced notable growth at the beginning of 2024, reaching new record highs. The median weekly rent across all Australian dwellings has climbed to $627, with significant variations across major cities. Sydney leads with the highest median rent at $770 per week, followed by Perth at $669 and Canberra at $674. The rise in rents is driven by strong demand and limited supply, influenced by factors such as high net overseas migration and declining household sizes.

Interestingly, regional and outer suburban areas are witnessing a substantial uptick in rent growth. Renters, priced out of central metropolitan locations, are turning to more affordable peripheral markets. For instance, Campbelltown in Sydney and Jimboomba in Brisbane have shown significant annual rent growth.

There are 3 factors driving the rental market: demand-supply imbalance, affordability constraints and regional rent growth. The rental market is pressured by high demand from overseas migrants and new household formations, against a backdrop of limited new housing supply. In the year to September 2023, nearly 550,000 new migrants arrived, while only 173,000 new dwellings were completed.

Renters are increasingly seeking more affordable housing options in peripheral and regional areas, driving up rents in these markets. Regional areas, particularly in Queensland and Tasmania, have seen a marked re-acceleration in rent growth, with annual increases in regional house rents climbing significantly.

Despite the overall rise, some markets are experiencing declines from peak rental values. The rental market is expected to remain tight until supply constraints are alleviated. A moderation in net overseas migration might provide some reprieve in the short term, but renters will likely continue to explore shared accommodations or move to more affordable regions in the meantime.

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