Top 20 rental markets where rents are expected to grow

Good news for property investors – new research has illuminated the top 20 rental markets in Australia where rents are likely to increase at the next rental review.

The quarterly Hood Tenant Report has identified the top 20 suburbs in Australia in which rents have increased at least 32% in the past 12 months. Further, most of these suburbs have reported vacancy rates under 1%, with some suburbs recording 0%.

Keep in mind that rental properties are regarded as ‘officially’ vacant when they’ve been on the market for 21 days or more, so this does not mean there are zero vacancies in these areas. It refers to the rental properties being filled in less than 21 days from listing.

Top 20 rental markets expected to grow

Source: Hood Tenant Report

Queensland recorded the greatest number of suburbs in the top 20 rankings at 6, followed by New South Wales (5), Western Australia (4) and Tasmania (2). The data for Victoria did not indicate a top 20 suburb.

Of this list, it’s a near-even split between regional areas and capital cities. There are 11 suburbs regional locations and nine in the capitals.

Landlords holding greater power

Hood founder and CEO, Tommy Fraser, said one big reason why rents are likely to increase in these 20 suburbs is “because demand is so high”.

“Ever since the pandemic started, people have taken a greater interest in where they live, both in terms of the location and the type of property. That’s reflected in moving data,” he said.

“If more tenants want to live in an area, that leads to increased demand for rental properties, which puts upward pressure on rental rates. That’s why landlords are likely to increase rents in these 20 suburbs at the next rental review,” said Mr Fraser.

For investors, these areas represent suburbs where landlords have a greater share of the power over tenants, and where potential greater rental yields may occur.

This has been a common trend recently, with data from Suburbtrends indicating one in ten investment properties are being sold in suburbs already experiencing low rental supply. For tenants, this results in higher rents and less opportunities for housing.

Suburbtrends research found that landlords are selling across 320 suburbs across Australia where vacancy rates have fallen below 1%. This is a result of “strong buyer demand”, according to Suburbtrends director, Kent Lardner.

“Rental properties are being taken out of the rental pool and are not being replaced,” said Mr Lardner in an interview with the Australian Financial Review.

For property investors considering taking out a home loan in 2022 to finance new housing opportunities, the predicted Reserve Bank of Australia cash rate hike may reduce your forecasted profits.

This is why choosing the most competitive home loan that allows for the greatest return for your portfolio is crucial. Using RateCity’s Real Time RatingsTM system, we’ve compiled a list of our top-ranking variable investor loans for your comparison.

Top ranking variable investor home loans

Compare home loans in Australia