It looks like relief is on the way for struggling renters, with the rental market across Australia having finally reached a turning point.
According to Domain’s Rent Report for the September Quarter of 2024, quarterly rental growth for both houses and units has stalled across the combined capitals, marking the weakest September quarter since 2019 for houses and since 2020 for units.
Domain Chief of Research and Economics, Dr Nicola Powell, said the era of explosive rental growth appears to be nearing its end.
“After enduring the steepest and longest rental surge in history, our latest Domain Rent Report shows that all capital cities have passed their peak in growth rates and are now decelerating rapidly, with some cities already in decline,” Dr Powell said.
Annual rent increases for houses have hit multi-year lows in Sydney, Melbourne, Brisbane, Perth, and Adelaide, suggesting that rising rents may have reached their peak.
In Sydney, house rents recorded their weakest growth rate for a September quarter in four years, with annual gains now at their lowest in almost three years.
However, weekly rents still sit at a record high of $775.
Melbourne house rents marked the weakest level for the September quarter since 2021, though weekly rents remain at a record high of $580 per week.
Brisbane house rents declined for the first time in just over four years, marking the end of the city’s longest and steepest growth period.
In the unit market, Sydney rents remained steady over the September quarter for the first time this calendar year, marking the weakest outcome for a September quarter in four years.
Units are holding at a record $720 per week.
Melbourne unit rents remained steady for the second consecutive quarter, a significant turnaround following a record run of rent gains.
Units are holding at a record of $550 per week.
Brisbane unit rents tumbled 1.7 per cent over the September quarter to $590 per week, marking the first quarterly decline in just over four years.
Dr Powell said that affordability is a significant factor contributing to this slowdown and will likely continue to restrict further growth.
“It has been a while since we’ve been able to bring good news to renters, who make up approximately 30 per cent of households,” she said.
The report also revealed that rental demand is easing, with the number of prospective tenants per rental listing on Domain falling to its lowest level since 2019, indicating a better balance between supply and demand.
On the supply side, there has been a rise in investment activity, with the value of investor loans rising by 35 per cent annually. Investors currently account for 38 per cent of new home loans, well above the decade average.
Dr Powell said all the signs are pointing to some relief for renters.
“This is long-awaited good news for renters, 38 per cent of which are renting to save for a property,” she said.
