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34 Cities Where Yearly Rent Increased By $1500 Or More

34 Cities Where Yearly Rent Increased By $1500 Or More
June 28, 2021 Propertyology Head of Research and REIA Hall of Famer, Simon Pressley

Our latest real estate research project involved reviewing the change in household rents from directly before the crazy COVID stuff to now.

As recently as a year ago, the general sentiment was that household rents in Australia were likely to fall. In a report in March 2020, Propertyology outlined some key rental market fundamentals along with why we predicted the opposite would occur.

As illustrated in the below graphic, the rise in rents over the last 18-months has been widespread.

Of the 8 capital cities, Darwin ($7,000) and Perth ($4,400) produced the biggest increase in asking rents over the last 18-months, although current rents still remain below their respective peaks from 2013-14.

There was an increase of $1,500 or more in asking annual rents for a 3-bedroom house in 6 out of 8 capital cities. Sydney’s annual house rent increased by a moderate $500, and Melbourne’s declined by $1,250.

Sadly, Melbourne has fast become Australian real estate’s ‘problem child’. The sharp decline in Melbourne rents is among a long list of fragile property market fundamentals for this great city.

The advertised asking rent of more than 60 prominent Australian towns and cities were reviewed by Propertyology. After annualising current weekly rents and comparing to 18-months ago, an increase of $1,500 or more was detected in 34 different towns and cities.

In alphabetical order, the locations where rents have skyrocketed are Adelaide, Airlie Beach, Ballina, Brisbane, Bunbury, Bundaberg, Burnie, Busselton, Canberra, Castlemaine, Coffs Harbour, Darwin, Dubbo, Geelong, Gladstone Gold Coast, Gympie, Hervey Bay, Hobart, Kempsey, Launceston, Noosa, Orange, Perth, Port Hedland, Port Macquarie, Rockhampton, Shepparton, Sunshine Coast, Traralgon, Victor Harbour, Wangaratta, Wodonga and Yeppoon.

 

Here’s an example of rental properties that Propertyology’s buyer’s agents have purchased for one of our property investor clients

Biggest Gains

Over the last 18-months, the standout increases in asking annual rents for 3-bedroom houses were in Coffs Harbour ($7,300), Noosa ($7,300), Byron ($6,500), Gold Coast ($6,240) and Ballina ($6,000).

An increase of $5,200 in annual rent in Launceston, one of my all-time favourite Australian cities, is indicative of the increased demand for its outstanding lifestyle, robust economy and low supply of rental accommodation.

Highlighting that the dire rental shortage exists in every Australian state, other locations that have produced the largest increases in annual rents include Yeppoon QLD ($5,200), Sunshine Coast QLD ($5,200), Orange NSW ($4,700), Busselton WA ($4,500), Port Macquarie NSW ($4,400), Geelong VIC ($4,400), Wangaratta VIC ($3,700), Rockhampton QLD ($3,600), Mount Isa QLD ($3,400), Warrnambool VIC ($3,100), Traralgon VIC ($3,000), Newcastle NSW ($3,000) and Esperance WA ($3,000).

 

Cause and Effect

These large rent increases are only marginally influenced by COVID. Rental supply is determined by the volume of people who buy properties for investment purposes (the everyday Aussie property investor).

This problem has evolved over a few years, as illustrated by the residential vacancy rate trend in the below graphic.

As explained in our comprehensive research report [“Locked Up: Australian Real Estate’s Mobility & Rental Crisis”], investor participation rates have been well below demand volumes for several years.

 

Apartment Pain

A review of asking annual rents also highlighted that the pressure on apartments is not as intense as detached houses.

Over the 18-months from December 2019 to June 2021, advertised rents for 2-bedroom apartments declined in Greater-Sydney (from $510pw to $470pw) and Greater-Melbourne ($425pw to $385pw).

When we drilling into the data for a closer look, Australia’s biggest rent declines over the last 18-months occurred in apartments in Melbourne’s Docklands ($10,000 annual decline), Southbank ($9,400), Melbourne CBD ($7,800), South Yarra ($6,200), St Kilda ($4,700) and Richmond ($4,400).

In Sydney, an annual rent decline of $5,700 was produced for 2-bedroom apartments in the CBD. Other notable Sydney apartment rent declines include the eastern suburbs ($5,200), lower-north shore ($3,600), and the inner-west ($2,900) while Parramatta and Canterbury both declined by $2,500.

The other six capital cities saw apartment rents increase, although not as high as for houses. Adelaide’s weekly apartment rents increased by $20 over the last 18-months while Brisbane (+$25pw), Canberra (+$35pw), Darwin ($55pw), Hobart ($35pw) and Perth ($65pw) are also up.

 

Perspective

At June 2021, the highest capital city rents for a 3-bedroom house are in Sydney ($700 per week) and Canberra ($635 per week), while the lowest is in Brisbane ($470 per week) and Hobart ($480 per week).

The chart below illustrates the change in household rents over the las decade.

Propertyology are national buyer’s agents and Australia’s premier property market analyst. Every capital city and every non-capital city, Propertyology analyse fundamentals in every market, every day. We use this valuable research to help everyday Aussies to invest in strategically-chosen locations (literally) all over Australia. Like to know more? Contact us here.

We walk-the-walk. Here’s a recent example of our work for a client:

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