City rents ease as regions feel the pinch

While renters in some regional areas compete for properties and push up rents, inner-city units in capital cities get cheaper.

Sisters Bhanupriya and Ashwini Chettiar at Melbourne’s Docklands where they rent. Picture: Aaron Francis

Australia’s rental market is at a crossroads. While renters in some regional areas are competing for properties and pushing up rents by thousands of dollars a year, inner-city units in capital cities are becoming cheaper.

Thirty-four cities nationally recorded a yearly increase in rents of at least $1500, according to buyers agency Propertyology. It follows recent data from property researcher CoreLogic that showed rents have steadily risen, up 6.6 per cent over the past financial year – the strongest increase since February 2009.

The unit market has improved considerably from the market low in December but rents are still down 1.1 per cent annually, driven by weakened demand from students and international arrivals. Detached houses on the other hand were up 8.8 per cent.

CoreLogic head of research Eliza Owen said the rental market was benefiting from the government stimulus boosting the housing boom, such as increased household savings and a strong economic recovery from Covid restrictions.

Rents in popular areas have shot up over the past 18 months, coinciding with popularity from home buyers. Annual rents for three-bedroom houses in Noosa in Queensland have increased $7300 annually, while landlords in Byron Bay ($6500), Gold Coast ($6240) and Ballina ($6000) have all benefited from a significant boost in payments.

It’s not just the surf and sand, however. The rental crisis gripping towns around the country is made worse by rising rents, leaving hopeful tenants with nowhere to live. Renters in Yeppoon, near Rockhampton, are paying an extra $5200 a year for a house, while large population centres surrounding capital cities, including the Sunshine Coast (up $5200), Geelong (up $4400) and Newcastle (up $3000) are feeling the squeeze.

The pressure is not all an outcome of the pandemic however, said Propertyology’s head of ­research Simon Pressley.

“Covid affected lots of things but it hasn’t reinvented the world,” he said. “There hasn’t been much activity by investors in the past 10 years with the exception of Sydney and Melbourne during the last boom.

“Covid came along and created an extra layer of pressure. Internal migration was already strong with people leaving capital cities to different parts of Australia, and that has obviously accelerated, adding extra rental demand.”

Inner-city apartment markets have been the hit hardest. Over the 18-months from December 2019 to June, advertised rents for two-bedroom apartments fell in Greater Sydney from $510 a week to $470, and Greater Melbourne fell from $425 a week to $385, with the latter particularly affected by the prolonged virus lockdowns.

Melbourne’s Docklands experienced a $10,000 annualised decline, much to the delight of sisters Ashwini and Bhanupriya Chettier, aged 24 and 20. The pair have been able to upgrade to a larger apartment after negotiating their rent down by $50 a week for their recently signed leasing agreement through real estate agency NelsonAlexander.

“We currently live in a one-bedroom apartment and knew that because of the pandemic and how that‘s affecting rental prices, we could afford to move to a two bedroom,” said Ashwini Bhanupriya.

Neighbouring Southbank (down $9,400), Melbourne CBD (down $7,800), South Yarra (down $6,200), St Kilda (down $4,700) and Richmond (down $4,400) have also recorded significant falls. In Sydney, annual unit rents are down $5,700.