Most expensive capital city rental markets revealed

Rental prices across the nation have continued to grow, with two capital cities hitting a weekly rent price of over $600, according to the latest data from CoreLogic.

CoreLogic’s quarterly Rental Review found that the national rental index increased 1.9% during the December quarter.

While quarterly growth rates last peaked in March 2021 at 3.2%, December’s figures represented the highest calendar year growth rate since 2007.

Capital city rental prices revealed

According to CoreLogic figures, our nation’s capital remains the most expensive capital city rental market. Dwellings in Canberra typically rent for $651 per week.

This is followed by Sydney at $604 per week, Darwin at $561 per week, Hobart at $521 per week and Brisbane and $507 per week.

The most affordable dwelling rental prices were recorded in Adelaide at $447 per week, with the next most affordable in Melbourne at $465 per week.

In terms of quarterly growth, Brisbane was the strongest performing rental market over the December quarter, growing by 2.3%. This was followed by Canberra and Hobart, which rose by 2.1%. Interestingly, Darwin’s rental market had the greatest annual rental growth of 15.2%, but the worst quarterly growth, with rents rising by 0.6% in the December quarter.

CoreLogic’s Research Director Tim Lawless said: “Rents were under extraordinary pressure from many factors, not least the demand for detached housing and an ongoing lack of rental supply.”

“For more than 18 months we’ve seen demand for detached housing continue unabated as more renters work from home, either on a permanent or now hybrid working arrangement, which drives demand for more spacious living conditions,” said Mr Lawless.

Regional rental market on the rise

Regional rents have overtaken capital city rents in the December quarter, growing by 2.5% compared to a 1.6% rise in the capitals. This has seen the annual regional rental growth soar to 12.1%.

When it comes to houses, regional rental prices have grown 33.2% over a 10-year period, compared to 24.9% growth across all capital cities combined.

Regional unit prices have also come out on top of capital city unit prices over the last decade, growing by 41.4% in the regional market compared to 14.4% for capital cities.

CoreLogic’s Research Director Tim Lawless said: “The stronger rental conditions across the regional markets is a story involving bothdemand as well as supply, following a surge in regional population growth through the pandemic, especially across regional Victoria and regional NSW.”

“While demand has risen we generally haven’t seen much of a supply response. Australia’s rental market is mostly reliant on private sector investors to provide rental housing.”

“Arguably the regions have less elasticity in rental markets, meaning, when demand rises, supply is less responsive than capital cities where investors are generally more active,” said Mr Lawless.

If you’re considering investing in property in 2022 and looking at one of these areas of rising rental prices, don’t forget to also factor in potential rental yields and home loan costs into your research.

The latest CoreLogic research also shows that gross rental yields are at record lows, with the growth in dwelling values outpacing rental increases. Gross rental yields fell 3.22% in the December quarter, as national dwelling values rose 3.9% and rental values increased 1.9% in the same time frame.

As property values continue to grow, and a future RBA-led cash rate hike is predicted, keeping investor home loan costs low may be worth considering.

Compare home loans in Australia