No end in sight for the rise in Adelaide rents

The typical house rent is now $90 per week more expensive than a unit, the widest differential on record.

The cost of renting in Adelaide became more expensive over the September 2022 quarter as strong demand and limited stock drove tight market conditions.

Over the quarter, house rents increased by 4.3 per cent to a new historic high of $480 per week. Unit rents increased by 2.6 per cent to $390 per week.

Over the year, rents have climbed even further. Adelaide house rents increased by 12.9 per cent over the 12 months to September 2022. Unit rents rose by a significant, but slightly softer, 11.2 per cent.

Rental growth in Adelaide has been strong since the onset of the pandemic, with house rents 23.1 per cent higher between March 2020 and September 2022 and unit rents up 20 per cent over the same period.

Neither property type is showing any sign of rental increases ending.

Cameron Kusher, Director Economic Research, PropTrack.

As a result of this stronger growth, the typical house rent is now $90 per week more expensive than a unit, the widest differential on record.

With inflation rampant and wage growth remaining well below comparatively, it is reasonable to expect that renters will become increasingly cost conscious in the period ahead.

At the same time, the desire for a house as opposed to a unit is not as strong as it was early on in the pandemic when property seekers were on the lookout for larger homes, bigger backyards and spare rooms to use as home offices.

Given these factors, it wouldn’t be much of a surprise if rental growth lifts at a faster pace for units than houses over the coming year.

And as people return to Adelaide from other parts of the country as well as from overseas, the cost of renting looks set to continue its upward trend.

Ultimately, the way in which we slow down rental growth is to either get more renters into home ownership or have more properties available for rent through investor purchases.

Either of those solutions will take time and, in the meantime, it looks like renters in Adelaide will continue to face the prospect of higher rental costs.