Rents ‘explode’ across the country, as house prices fall in many Melbourne, Sydney suburbs

Rents have soared because of a record low number of available rental properties in a “crisis” that analysts predict is set to worsen.

Capital city rents jumped 11.8 per cent in a year, after 2.2 per cent rise in the month to April 12, according to SQM Research.

Capital city house rents surged 14.7 per cent in a year, while unit rents rose 11.2 per cent.

“The reality on the ground will be that many families, many young people will not be able to find the home that they actually require,” Louis Christopher, managing director of SQM Research, said.

A return to the city in the nation’s biggest capitals is driving up the cost of rent. Rents for units in Sydney’s CBD rose 5.5 per cent in the last 30 days and 7.4 per cent in Melbourne’s CBD.

Both areas were among those that saw rents fall most when COVID-19 stopped migration into Australia.

However, Brisbane recorded the largest yearly jump in combined house and unit rent, up 15.2 per cent.

SQM Rental prices
Source: SQM Research

The steep increase in rents is being driven by the low number of available rental properties.

“We have a real issue on our hands,” Mr Christopher said.

The national residential property rental vacancy rates fell to 1 per cent in March, down from 1.2 per cent in February.

“This represents half of the total number of vacancies reported as of 12 months ago and the lowest vacancy rate since 2006,” Mr Christopher said.

“And recent monthly data suggests we are still not at the worst point of the crisis. We were thinking at least regional Australia may have started to have some relief as people return back to the cities. But that has not happened as yet.”

Rental vacancy table
Source: SQM Research

Mr Christopher said many localities and towns had rental vacancy rates close to zero.

“Clearly, we are not going to resolve this overnight, but I do hope the various state and territory governments will ramp up their rental assistance packages in order to cushion the rental accommodation emergency we have here and now.”

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Australia enters a deep rental crisis.(ABC: Rachel Pupazzoni)

House prices fall but buyer interest still high

Rents are rising at the same time as house prices are falling across much of the country.

The percentage of suburbs with house price declines in the March quarter was 46.8 per cent in Melbourne, 38.6 per cent in Sydney, 10.9 per cent in Hobart, 13.4 per cent in Perth and 18 per cent in Darwin, according to CoreLogic.

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