After increasing nearly 50% since the start of the COVID-19 pandemic, house rents have slowed significantly.

Rental prices across Australia barely moved in the last 3 months to September and 2 new reports show that they are expected to stagnate further in the coming months.

The sharpest period of growth appears to be over in most cities, with Brisbane and Canberra now falling on average.

Domain chief economist has stated that prices inevitably had to stop growing after the unprecedented rises of the past five years.

“I think the extreme rate of rental growth is one of the aspects that’s actually slowing down the rent growth that we are seeing now,” she said.

“The rental market has not only reached its affordability ceiling, it’s actually smashed it and surpassed it.”

In the 4 years since March 2020 house rents have increased by 48% and unit rents by 40% across the combined capitals. This is compared to wage increases of 13% in the same period.

During the latest quarter house rents measured across all capitals and all regional markets combined did not move at all. 

In Sydney rents rose 2% to a record high of $775 per week, Darwin $3% to 680, Brisbane rents fell .8% to $625, Canberra they fell .7% to $680 per week and House rents in Melbourne were stable at $580 per week.

 

Unit rents did not grow at all when measured as combined capitals and in Sydney and Melbourne remained stable at record highs of $720 and $550 respectively.

Powell said rents will continue to slow because tenants simply can’t afford the high prices.

“What that means for the rental market is it’s playing out in driving demographic shifts. It’s prompting tenants to seek house shares or opt for inter-generational living. They’re moving back in with mum and dad to alleviate the financial strain.”

 A second report from Prop Track showed annual growth in unit rents at 9.1%, remained stronger than the annual growth in house rents at 6.9%, the gap has narrowed between the two to just $20.00 per week. 

More properties have come on the market for renters with lending to investors up 30%. More rental stock lowers the acute demand for rental properties.