Rental prices in our largest capital cities, Sydney and Melbourne, are sliding, but it’s a different story in Australia’s other capitals and regional hubs.
ABS inflation data for the December quarter 2021 showed that rents have continued to fall in Sydney and Melbourne. Rents in Sydney have fallen by 4.2 per cent since early 2020, while Melbourne rents are down 2.5 per
Elsewhere though, rents have been growing strongly, up between 2.5 and 7.2 per cent since the pandemic began.
This marks a big contrast with Melbourne and Sydney, which have seen reduced rental demand since the COVID-19 crisis for a number of reasons.
The pause on immigration hurt these markets the most, with many recent immigrants, particularly students, traditionally calling these population centres home.
Remote working arrangements combined with preference shifts towards space and lifestyle have played a significant role in the cost of rent. For many, extended lockdowns have also tarnished the appeal of our denser cities.
While the ABS inflation data measures changes in total rents – advertised prices for new rentals often provide a more timely signal of conditions.
The PropTrack Rental Report goes into depth on conditions in the rental market. The data on advertised rents line up pretty closely with the inflation data: prices falling in Sydney and Melbourne but growing elsewhere.
Advertised rents
Percentage change from March 2020 to December 2021
But the most interesting thing is how strongly rents have grown outside of capital cities – something the ABS does not track.
With the exception of Queensland and the Northern Territory, it’s clear that rents in regional areas have been grown considerably relative to capital cities.
Regional areas have benefited from all of the reasons Sydney and Melbourne have fallen out of favour with renters. More people able to work remotely and desiring more space and lifestyle changes.
As the PropTrack Rental Report outlines, rental conditions remain tight in regional areas so rents look set to continue their strong growth in 2022. This will place further pressure on local renters in the coming months.
Paul Ryan
