National rent values rose 0.4% in the December quarter, the smallest Q4 change in rents since 2018.
The pace of national rental growth continued to slow in 2024, with rents up 4.8% over the year after surging 8.1% in 2023, according to CoreLogic’s latest Quarterly Rental Review.
The result marked the smallest annual rental increase since the 12 months to March 2021 when rents rose 3.6%.
This suggests that while still high relative to the pre-covid decade average (2.0%), the national rental market has well and truly passed the peak of the recent rental boom. This notion was further supported by the 0.4% rise in rents in the December quarter, which was the smallest Q4 change in rents since 2018 (0.2%).
"Rental affordability continues to be a significant drag on rental growth."
Since the onset of COVID, rents have increased by 36.1% nationally, equivalent to a rise of $171 per week, or $ 8,884 per year at the median level.
As of September 2024, assuming a median household income, renters were spending approximately 33.0% of annual pre-tax income to service the median rent, the highest portion since CoreLogic started tracking rental affordability in 2006.
The net result has potentially seen some prospective renters delay their decision to leave the family home, while others have looked to form larger share households as a way of distributing the additional rental burden, unwinding the previous shrinking in the average household size that was apparent through the early stages of COVID.
The move to larger households was also apparent across property types, with houses recording both stronger quarterly (0.6%) and annual rent rises (5.0%) compared to the unit sector (-0.2% and 4.2%, respectively).
Beyond affordability, changes in supply and demand as important factors contributing to easing rental growth."On the demand side, 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.
"While on the supply side, the annual value of new investor lending increased by 26.3% over the year to September 2024, increase in investor participation above levels, suggesting a potential net increase in rental stock.
"Together these factors have supported an easing in vacancy rates over the year, from a low of 1.4% in November 2023 to 1.9% at the end of 2024."
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