Renters across Australia are breathing a sigh of relief as the era of skyrocketing rental prices appears to be drawing to a close. After years of rapid increases that have stretched household budgets to their limits, the latest figures indicate a significant slowdown in rental price growth, offering a glimmer of hope for those feeling the pinch.
The December quarter of 2024 saw rents grow at the slowest rate in six years, marking a pivotal change in the rental market. With a modest rise of just 4.8 per cent over the year, compared to the steep 8.1 per cent increase the previous year, renters are finally seeing a much-needed reprieve.
This slowdown is a welcome change for renters who have been grappling with the financial strain of housing costs since the COVID-19 pandemic. The pandemic’s impact on the economy led to a surge in rental prices, with the median household forking out an additional $171 per week. According to CoreLogic economist Kaytlin Ezzy, this has resulted in renters dedicating almost a third of their pre-tax income to cover the median rent as of September, the highest proportion since CoreLogic began monitoring rental affordability in 2006.
The strain on renters has been so severe that it has redefined living arrangements, with some choosing to delay moving out of the family home and others opting to form larger share households to distribute the cost burden. This shift has reversed the trend of shrinking household sizes observed during the early stages of the pandemic.
However, the tide is turning. The easing of net overseas migration is contributing to a moderation in rental demand, with expectations that levels will return to pre-COVID averages by 2026/27. Additionally, investors are now accounting for a larger share of new housing finance, suggesting an increase in the supply of rental stock is on the horizon.
Vacancy rates have also seen an uptick, rising from a low of 1.4 per cent in November 2023 to 1.9 per cent at the end of 2024. This increase in available rental properties is further evidence that the rental market is stabilising.
‘The national rental market has well and truly passed the peak of the recent rental boom,’ Ezzy stated, signalling a shift that could bring more balance to the market.
The slowdown in rental price growth has varied across the country. Regional rentals outpaced capital cities with a 1.2 per cent increase over the quarter, while the combined capital cities saw a negligible rise of 0.1 per cent. Melbourne experienced the most significant quarterly slowdown, with a decrease of 0.5 per cent, followed by Sydney and Darwin, which both saw a decline of 0.2 per cent. On the other hand, Adelaide, Perth, and Hobart each recorded growth of over one per cent during the same period. Despite these increases, Tasmanian city remains the most affordable capital in Australia, with a median rent of $554.
Have you observed any changes in rental prices in your area? Have recent market shifts allowed you to negotiate a better lease? Share your experiences in the comments, and let’s explore how these trends are shaping the rental market together.
Also read: Was 2024 ‘as bad as it gets’ for rents? Here’s what we can expect next year
