Are rents set to rise in 2024?
Over the past 12 months, rents rose four times the pre-COVID-19 average. Is this trend forecast to continue this year?
Across Australia, rents went up 8.3 per cent in 2023, according to new data from CoreLogic. While this is a whisker below the 9.5 per cent and 9.6 per cent rises recorded in the previous two years, the 2023 result is still “more than four times the pre-COVID decade average of 2 per cent per annum”, the thinktank reported.
Translated into dollar terms, Australians are now paying an average of $46 more on weekly rent than they were at the end of 2022.
According to CoreLogic, however, “the headline numbers mark the diversity that has emerged across rental markets through 2023”.
Unit growth has experienced a mark slowdown compared to previous years, though it continues to outstrip house rental growth.
Tim Lawless, research director at CoreLogic, stated: “The more pronounced slowdown in unit rental growth could reflect slower net overseas migration through the second half of the year, especially student arrivals which are highly seasonal.”
“It could also be a possible sign that more unit renters are reaching their affordability ceiling as rents exceed how much they are willing or able to pay,” Mr Lawless said.
Different areas of Australia saw substantial differences in rental growth over 2023. In Perth, rental growth led the nation and it continues to show no signs of slowing.
Units in Perth rose by 16.5 per cent over 2023, equal to $80 extra in weekly rent. House rents also rose by an impressive 12.9 per cent, or approximately $73 per week.
Other areas struggled much more, with Canberra and Hobart both seeing declines in rent over the last year. In regional Australia, normalisation of regional migration trends saw average rental growth slow to just 4.3 per cent, the smallest calendar year rise since before the pandemic.
Looking forward into 2024, Mr Lawless predicted that rents will continue to rise, albeit more gradually.
“Considering we are yet to see any material response in rental supply, growth in rents is likely to remain above average in 2024,” Mr Lawless said.
“However, we could well see a further slowdown in rental growth as affordability pressures drive structural changes in rental demand,” he said. “This could include a lift in average household size as group households re-form and multigenerational households become more common.”
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