Rental prices rise at highest rate since 2009, says CoreLogic
Rental price growth rates have eased in recent months, but figures show that nationwide rental rates have increased by 6.6% over the past year to June.
This the highest growth rate since January 2009, said Corelogic’s Rental Review for the June 2021 quarter.
Currently regional rents outpace capital city rents, following the current trend of people looking for property outside major cities. As such, rental growth in regional areas hit their highest annual growth on record, increasing by 11.3% in June.
CoreLogic’s head of research in Australia, Eliza Owens says that this growth follows a subdued rental performance through much of the 2010s generally.
Interestingly, the increase in rents is due to many of the same factors that have led to the current housing price upswing, she points out.
“These factors include increased government stimulus through COVID-19, accumulated household savings through lockdown periods, the swift economic recovery seen as restrictions eased, and a lack of rental supply in some markets have also exacerbated rental price increases, particularly in major centres of regional Australia,” says Owens.
“It is interesting to note that, as with house prices, rent prices are seeing a deceleration in growth at the national level and across each of the capital cities. This may reflect affordability constraints, but there could also be higher levels of rental supply as investor activity in the market increases. Over May, ABS data showed a 13.3% increase in new finance lent for the purchase of investment property.”
Furthermore, the overall price shift might be partly due to the impact COVID-19 has had on the country. For example, with the borders closed, major cities have seen a decrease in rental demand due to the absence of new international migrants.
However, CoreLogic predicts that rents may stabilise at lower price levels than pre-pandemic, in Sydney and Melbourne specifically.
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