Australia’s Rental Market Sees a Shift as Growth Decelerates - Property Inc

Australia’s Rental Market Sees a Shift as Growth Decelerates

After years of steep increases, the Australian rental market is showing signs of slowing down, according to the latest analysis by Nerida Conisbee of Ray White. The change comes as a relief to many renters who have faced significant challenges since the onset of the pandemic.

“Rental growth is decelerating, and this trend is expected to continue through the year,” Conisbee reports. She highlights that while rental prices have surged dramatically over the past four years, certain areas are now experiencing a slowdown, particularly in cities like Sydney and Melbourne.

The pandemic years saw unprecedented increases in rental costs. “Since the start of the pandemic, rents have risen on average $200 per week across Australia, with Perth topping the list with an increase of $280 per week,” Conisbee states. In contrast, the four years prior to the pandemic saw minimal increases, indicating a sharp turnaround in rental market dynamics.

Despite the deceleration, challenges remain. The rental stress among Australian households has risen since 2020. Conisbee explains, “While the 10 percent of households under rental stress has increased, it is part of a global trend driven by underbuilding and population growth.”

The real estate expert also notes that the rental market’s future hinges on increasing the supply of rental properties. “Rising levels of rental stress are a problem that can only be improved with an increase in the number of rental properties,” she advises. Before the pandemic, rental affordability was supported by high levels of construction and investment, including significant overseas investment.

Looking ahead, Conisbee is cautiously optimistic but warns that significant improvements in rental affordability are still a few years away. “We are unlikely to see rents moderate significantly until we start to reach targets set out by the Federal Government’s Housing Accord,” she concludes.

This analysis paints a picture of a rental market at a turning point, with potential relief in sight for renters, albeit delayed. As Australia navigates these changes, the impact on renters and the broader housing market will be critical areas to watch.

Reference:

https://www.therealestateconversation.com.au/news/2024/04/22/rental-growth-decelerating-ray-white/1713735708 

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