Market Update - March Qtr, 2023
After seeming to plateau over the latter half of 2022, rent increases appear to have reaccelerated. According to the latest data, between January and March, the national median rent rate rose by 2.5%. This is notably larger than the 2.0% increase recorded over the previous 3 months.
A strong demand for units is driving this reacceleration, with the national median unit rent up 3.9% over the quarter. By contrast, over the same period, house units increased a more modest 2.0% nationally. This trend is particularly pronounced in the largest capitals, with Sydney and Melbourne unit rents up 5.3% and 4.3%, respectively.
Supply also remains a major concern and is a key factor placing upward pressure on rent prices. New listing levels remain well below those seen last year (down 17.3%) and the 5 year average (down 36.3%). This has pushed vacancy rates down even further, with the national rate reaching a new record low (1.0%) in February.
While prices continue to increase in most locations, Canberra and Darwin remain the outliers. After seeing median rents decrease last quarter, both cities recorded further falls (0.7% and 1.0%, respectively) over the March quarter. Darwin also recorded the weakest quarterly growth numbers for both house (down 1.5%) and unit (down 0.4%) rents.
Spotlight on the Melbourne Rental Market
Melbourne has once again seen some of the strongest quarterly rent growth figures, with the median rent rising 3.7%. As noted above, units have seen the sharpest increase, with Greater Melbourne’s median unit rent up 4.3% over the quarter.
Greater Melbourne remains the cheapest capital to rent in, with the median rent finishing the quarter sitting at $526/week. However, recent increases have seen the gap close, with Adelaide now only $5/week more expensive, down from $15/week last quarter.
Melbourne’s vacancy rate has dropped significantly, from 1.0% in December to 0.7% at the end of March. This is largely due to limited supply of new listings and increasing overseas migration, which is currently at record levels.
Brighton ($1,294/week), Black Rock ($1,212/week), and Middle Park ($1,177/week) remain the most expensive suburbs to rent houses. Melton ($374/week), Kurunjang ($392/week), and Broadmeadows ($404/week) remain the most affordable.
For units, Beaumaris ($733/week) is still the most expensive suburb, and Melton South ($334/week) is now the most affordable.
Update on Our Activity
With the rental market being so highly competitive, Your Home Hunter’s services continue to be in high demand. Over the last quarter, we again assisted a record number of renters find and secure the perfect property. We also saw an increase in clients seeking advice on issues like rents increasing and landlords planning to sell.
As you would expect, most of our client demographics have mirrored emerging trends within the broader rental market. For example, the majority (68%) of clients we have helped find a home in Melbourne were relocating from interstate or overseas. This reflects both the record high levels of migration the country is experiencing and the Melbourne market’s post-pandemic recovery.
Over the last quarter, we have also secured the majority (61%) of our clients their new home off market. This is largely due to the phenomenal support we receive from our amazing network of Property Managers. However, we feel it also reflects the significant stress PMs are currently under, and the benefits off markets provide landlords, PMs, and tenants.