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Why are rents so high right now?
Median asking rents are reaching record highs in several capital cities across Australia. So what is causing this pain for renters?
The most recent Domain Rental Report found that median rents had increased year on year in every Australian capital city. Even going quarter by quarter, rents increased in every capital except Sydney, where it held steady at the record high of $600.
But it was Canberra in the ACT that recorded both the largest year on year increase in median asking rents, as well as the highest median asking rent ever to be recorded across the capital cities.
Record high rents were recorded in Sydney, Melbourne, Brisbane, Adelaide, Canberra and Hobart, with Perth reportedly just short of matching its 2013 record, and Darwin reversing the decline seen in the previous quarter.
Domain Rental Report March 2022
Capital City | MAR 22 | DEC 21 | MAR 21 | Quarter on Quarter | Year on Year |
| Sydney | $600 | $600 | $550 | 0.0% | 9.1% |
| Melbourne | $450 | $445 | $435 | 1.1% | 3.4% |
| Brisbane | $500 | $480 | $435 | 4.2% | 14.9% |
| Adelaide | $465 | $450 | $425 | 3.3% | 9.4% |
| Perth | $480 | $460 | $430 | 4.3% | 11.6% |
| Hobart | $520 | $500 | $480 | 4.0% | 8.3% |
| Canberra | $700 | $675 | $600 | 3.7% | 16.7% |
| Darwin | $610 | $600 | $550 | 1.7% | 10.9% |
| Combined Capitals | $508 | $499 | $468 | 1.8% | 8.6% |
Source: Domain.com.au
Why are rents so high?
Each individual capital city market has its own challenges that contribute to rental pain for its residents, but there are a few recurring factors described in the Domain report:
- Lack of supply: Some investors sold off their properties during the pandemic, and completion of new residential dwellings has slowed.
- Higher demand: International borders are reopening, and employees are returning to CBD offices.
- High purchasing prices: First home buyers are being locked into the rental market for longer.
- Short-term rentals: Some landlords are converting rental housing back to short-term accommodation as tourism picks back up.
It’s also possible that the interest rate hikes that are forecast to arrive as soon as June 2022 could affect Australia’s renters. As investors may be faced with higher mortgage repayments on top of other cost of living pressures, some may raise rents to help cover these higher costs. There is even speculation that if rising rates lead to falling house prices, investors could raise rents to help make up for lower capital growth.
Renters wanting to make the step onto Australia’s property ownership ladder may want to crunch the numbers to work out what kind of mortgage repayments they may be able to afford compared to their rental payments.
Disclaimer
This article is over two years old, last updated on April 14, 2022. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent home loans articles.
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