Rents in cities are beginning to lift at an alarming rate. The CoreLogic estimate increase in median rents for houses is 13.5% across the 5 major capital cities in the year to December 2022. Growth in the price of unit rents is even higher, 15% across the 5 major capital cities over the year.
Will the growth in rent moderate? The latest report from Domain shows national vacancy rate at 0.8%, the lowest on record. This is easy to understand with an increase in migrants flowing back into Australia, both temporary (tourists and students) and permanent (skilled workers).
There is hope of some relief from new dwellings, with the ABS reporting 245,000 dwellings currently under construction, a high for the series. Unfortunately, relief may be short lived as there is a disturbing drop in new dwelling commencements to 45,000. This is well below the typical longer term rate of 55,000 each quarter.
Low vacancy, high demand and a poor outlook for new dwellings in the pipeline create a toxic brew for renters. House price affordability may have become difficult for many households trying to enter the market but is it any better to be at the mercy of the rental market?