Capital rents surge as supply remains tight

Tenants in capital cities should be looking to budget for further rent increases this year, with new figures from PropTrack suggesting a two-speed market will emerge in 2023.

Hopeful Sydneysiders check out a rental property in Sydney’s eastern suburbs in December. Picture: NCA NewsWire / Jeremy Piper

Tenants in capital cities should be looking to budget for further rent increases this year, with new figures from PropTrack suggesting a two-speed market has begun to emerge.

Asking rents climbed 6.7 per cent nationally to a median of $495 per week through 2022, picking up pace from the year prior (4.7 per cent), according to PropTrack’s latest Market Update report.

Increased demand for the limited number of rental properties in capital cities forced prices up 10 per cent over the past 12 months, with units (up 9.3 per cent) rising more than houses (8.3 per cent). The largest changes were in Brisbane and Adelaide, each up more than 11 per cent through 2022.

On the other hand, regional areas increased 7.1 per cent, slower than in 2021 (up 10.5 per cent).

A silver lining did emerge in the December quarter, with the market largely holding steady.

But PropTrack head of economic research Cameron Kusher believes the reprieve may be short-lived as capital city rents push higher due to people returning from the regional areas they fled to through the pandemic and the return of migrants and international students.

“The return of the major capital cities is probably the big story here,” Mr Kusher said. “In 2022, we saw rental growth in regional areas start to slow as not as many people continued to move regionally. That eased some of the pressure in those markets whereas, in the capital cities, we had people coming back.”

The low number of rental properties on the market is one of the major contributors to the current housing crisis.

The rental increases have failed to offset some of the cashflow pain would-be investors face after last year’s eight consecutive interest rate rises.

Founder of investor buyers agency Propertyology Simon Pressley said new supply being added to the market is the only way to ease the pain of renters.

“It’s going to take years for the supply to rebalance itself,” Mr Pressley said. “We are in the perfect storm, the unwanted storm. Those who might have otherwise contemplated adding to that supply can’t afford to do that or they can but they don’t want to.”

Sydney asking rents climbed 7.7 per cent through 2022, to a median of $560 per week. The 9.8 per cent annual increase in Melbourne brought the median rental cost to $450 per week, on par with Adelaide (up 11.8 per cent) and Perth (up 4.7 per cent).

Weekly costs in Brisbane rose 11.4 per cent to $490, more than $100 a week cheaper than Canberra (up 6.3 per cent to $595). Hobart rose 5.3 per cent to $500 and Darwin was up 1.9 per cent to $550.