Rental growth in Australia hits four-year low amid declining capital city demand

The Australian rental market has experienced its slowest growth in four years, according to CoreLogic’s latest monthly Chart Pack.

National rents increased by just 0.1% in July, marking a significant slowdown from the 39.7% surge recorded over the past five years.

CoreLogic Australia economist Kaitlyn Ezzy said the easing trend is a positive sign for renters who have faced steep increases in recent years.

“July’s small rise in national rents signals a broader cooling trend across the country and will provide some renters a much-needed respite after years of high demand and steep increases,” Ezzy said.

The slowdown varied across capital cities, with Adelaide seeing a 0.6% increase, while rents declined in Sydney, Brisbane, and Hobart.

Ezzy attributed the varied growth to an affordability ceiling in major cities, forcing tenants to explore alternatives such as shared housing or relocation.

At an annual level, national rents rose by 7.8% in the year to July, down from a recent peak of 8.6% in April.

Perth recorded the strongest rental growth at 12.7%, followed by Regional WA at 10.6%.

Despite the overall slowdown, Ezzy warned that substantial relief for the rental market is unlikely in the short term due to low housing supply.

“Low supply will likely continue to put upward pressure on rents, albeit at a slower pace,” she said.

The report also highlighted other key trends in the housing market:

• The combined value of residential real estate rose to $10.9 trillion at the end of July.
• National home values eased to 1.7% over the rolling quarter.
• Perth had the highest monthly dwelling value increase in July at 2.0%.
• Annual transaction volumes appear to have peaked, with an estimated 511,211 sales in the 12 months to July.
• Days on market increased to 33 days in the three months to July.
• New listings totalled 36,973 nationally in the four weeks to 4 August, 1% higher than the same time last year.
• Auction clearance rates averaged 64.2% in July, slightly weaker than the 10-year average of 65.6%.

Ezzy noted that the high cost of renting is likely motivating more people to buy their first home, with lending to first-home buyers rising 1.5% to $5.3 billion in June.