According to CoreLogic’s latest Quarterly Rental Review, the December quarter saw rents increase by just 0.4 per cent, marking the smallest fourth-quarter change since 2018, signalling the end of the recent rental boom.
CoreLogic economist Kaytlin Ezzy said affordability has become a major constraint on further rental growth, with tenants now facing unprecedented cost pressures.
“Since the onset of COVID, rents have increased by 36.1 per cent nationally, equivalent to a rise of $171 per week, or $8,884 per year at the median level,” Ms Ezzy said.
The data shows renters are now spending approximately 33 per cent of their pre-tax income on rent, the highest proportion since CoreLogic began tracking rental affordability in 2006.
Regional areas continue to outperform capital cities, with combined regional markets recording 6.2 per cent growth over the year compared to just 4.3 per cent in capital cities.
Sydney remains Australia’s most expensive rental market, with median weekly rents of $773, followed by Perth at $695 per week, which has now overtaken Canberra as the second most expensive capital city for renters.
The slowdown in rental growth has been most pronounced in Sydney and Melbourne, where annual growth rates have fallen dramatically from 9.9 per cent and 11.0 per cent in 2023 to just 3.0 per cent and 4.1 per cent respectively in 2024.
The only capital cities to see increased momentum in rental growth were Hobart (6 per cent), and Canberra (2.6 per cent), off the back of falling rent values in 2023.
Hobart maintained its title as the county’s most affordable rental capital and was the only capital to record a median weekly rental value under the $600 mark, at $554 p/w.
Melbourne came in second with the typical dwelling renting for $604 p/w, followed by Adelaide at $611 p/w.
Ms Ezzy said there were multiple factors contributing to the market cooling, including changes in migration patterns and increased investor activity.
“The easing in net overseas migration was also a factor contributing to softer rental demand, with net overseas migration levels expected to normalise around pre-Covid decade averages by the 26/27 financial year,” she said.
National gross rental yields have remained steady at 3.7 per cent over the year, though this remains below the pre-COVID decade average of 4.2 per cent.
“Together these factors have supported an easing in vacancy rates over the year, from a low of 1.4 per cent in November 2023 to 1.9 per cent at the end of 2024,” Ms Ezzy said.
