Renters seek larger properties as cost of living pressures mount

CoreLogic data has revealed Australian renters are increasingly favouring larger properties amid rising living costs and changing migration patterns.

The national median weekly rent reached a new record high of $634 in June, up $48 from a year ago.

Eliza Owen, Head of Research Australia at CoreLogic, said rental growth for smaller dwellings has slowed significantly over the past year.

“Annual growth in one-bedroom units and studios slowed from 16.8% in the year to April 2023 to 7.1% in the past 12 months,” Ms Owen said.

In contrast, rents for houses with five or more bedrooms rose 8.7% over the year to June.

The shift may reflect the formation of share houses or multiple family households as renters seek to reduce costs.

CoreLogic’s analysis showed the average rent per bedroom becomes cheaper as the number of bedrooms in a property increases.

For a five-bedroom house, the average weekly rent per room was $175, compared to $271 for a two-bedroom house.

Ms Owen suggested the trend could be driven by renters forming share houses to cope with rising costs.

“Rising rent costs may prompt some renters to form share houses and seek out larger dwellings for a cheaper room rate,” she said.

A slight slowdown in net overseas migration may also be impacting demand for smaller inner-city units.

The data showed considerable variation between cities and regions.

In Sydney, Melbourne and Brisbane, larger houses saw the highest rental growth.

However, in Perth and Adelaide, rents for smaller properties increased more rapidly.

Ms Owen said these cities may eventually see a similar shift towards demand for larger shared households.

The findings highlight the ongoing pressures in Australia’s rental market as affordability continues to deteriorate for many tenants.