CoreLogic reported that rents nationwide rose just 0.1 percent during the month, and that no area saw large increases in the middle of winter.
This means that rental growth in the twelve months to July was 7.8 percent, the lowest annual change in the last three years.
While the news will be welcomed by current and prospective renters, it doesn’t mean they’ll find relief in their wallets any time soon, as rents are still at record highs. According to CoreLogic, the average weekly rent has increased by about $180 over the past five years.
Nevertheless, Kaytlin Ezzy, economist at CoreLogic Australia, said renters could take comfort in the fact that there is a general “cooling trend” taking place across the country, providing “a much-needed recovery after years of high demand and steep price increases”.
Rents fell by 0.1 percent in Sydney and Brisbane and by 0.3 percent in Hobart.
Adelaide recorded a moderate increase of 0.6 percent, Melbourne and Perth each rose by 0.3 percent. Darwin and Canberra remained unchanged.
Ezzy said that while the results had varied across capital cities, it was clear that an “affordability threshold” had been reached in major cities.
The economist attributed the significant decline in rent increases to the behavior of tenants, who were looking for alternatives to counteract the increased prices.
“With renters no longer able to borrow to pay rent, many are turning to alternatives such as shared apartments, moving to cheaper areas or exiting the rental market and buying their own home,” Ezzy said.
On an annual basis, Perth recorded the strongest rental growth in the 12 months to July 2024, with prices rising by 12.7 percent, followed by the Western Australia region with 10.6 percent.
In capital cities, 12-month rental growth slowed from 9.7 percent in February to 8 percent in July, while in the regions growth accelerated from 5.4 percent to 7.1 percent over the same period.
Ezzy noted that strong migration from cities to rural areas has helped keep rental growth high from a past 12-month perspective, and that stronger development is expected to continue in these areas as people moving away from sea and land continue to seek affordable rentals in rural areas.
She noted that despite the high interest rate environment, rents are an incentive for tenants across the country to seek a purchase.
According to CoreLogic, loans to first-time home buyers rose 1.5 percent to $5.3 billion in June, accounting for about a third – 29.2 percent – of new home financing.
