Rents have soared in the past year, with low vacancy rates contributing to an 11 per cent increase in capital city rentals in the 12 months to March.
The situation is even worse in the regions, with rental prices growing by 13.1 per cent in the same period.
Rents are expected to keep surging, according to InvestorKit analysis, which has identified 20 areas that could see a rent hike of $50-$100 a week within the next two years.
InvestorKit founder and head of research Arjun Paliwal said there were several factors driving low vacancy rates and, subsequently, higher rents.
“These record-low vacancy rates are due to increasing demand and limited supply, caused by factors including greater housing demand, particularly for detached houses, due to the work-from-home trend and desire for a better lifestyle,” Paliwal said.
He also said the recent housing boom and high prices were forcing people to stay in the rental market for longer, and that more Gen Ys were moving out of their parents’ homes, shared houses, or were upsizing.
Strong population growth in regional areas was also playing a role, as well as a fall in property investor activity over recent years.
Here are the 20 regions Paliwal expects to see $50-$100 rent increase within 24 months, and why.
Brisbane - 0.8 per cent vacancy rate at present
“While demand is rising, Brisbane's new house supply is very low, with new house builds accounting for just 2.8 per cent of the total number of houses,” Paliwal said.
Adelaide - 0.3 per cent vacancy rate at present
“As supply levels keep declining, the heightened market pressure is likely to push up rent prices further,” he said.
“The city’s increasing employment opportunities, backed by heavy infrastructure investments and moderate supply levels, will also contribute to Adelaide’s rising rents.”
Perth - 0.5 per cent vacancy rate at present
Paliwal pointed to trends in Adelaide to explain Perth’s rental market trajectory.
“Adelaide’s increasing employment opportunities, fast-growing population, paired with its moderate supply level, leads us to believe that Perth's rent level will continue to surge over the next 12-24 months,” he said.
Hobart - 0.2 per cent vacancy rate at present
With the lowest vacancy rate of all capital cities, rents are continuing to skyrocket.
“With just 2.23 per cent of new house builds approved and a downward trend, paired with Hobart’s rising job availability and low supply levels, rents over the next 12-24 months will continue to surge.”
Canberra - 0.5 per cent vacancy rate at present
Canberra’s low vacancy rate (at 0.5 per cent) has led to rental prices increasing 12.1 per cent over the past year. It has also grown 35.4 per cent over the past decade.
“The capital city's fast-growing population growth - 17 per cent over the past 10 years - moderate levels of housing supply and rising rental demand, indicates rents will continue to surge.”
Devonport & Burnie-Ulverstone, Tasmania - 0.1-0.2 per cent vacancy rates at present
“Due to the low vacancy rate, Devonport's rent level has increased by 15.6 per cent over the past year, while Burnie-Ulverstone has risen 16.1 per cent.
“As supply stays at a low level, the high market pressure is likely to push the rent level further up.”
Nerang & Bundaberg, QLD - 0.2 per cent at present
“The low vacancy rates have seen Nerang’s rent prices rise a significant 21.6 per cent over the past year, and 49.4 per cent over the past decade.
“Meanwhile, Bundaberg has experienced a 15.2 per cent rise in rent levels over the past year. It has also grown 33.3 per cent over the past decade.”
Maryborough, QLD - 0.3 per cent vacancy rate at present
“As rental supply levels continue to trend downwards and low vacancy rates continue, it is likely rent levels will be pushed further up.
“The region’s low rates of new housing supply (2.18 per cent), combined with increasing employment opportunities and low vacancy rates will result in rent levels surging in Maryborough.”
Buderim, QLD - 0.5 per cent vacancy rate at present
“The low vacancy rate has led to Buderim's 20.4 per cent annual price increase in rent.
“While the number of for-lease listings is bouncing, the recovery is not fast enough to match the surging demand.”
Toowoomba, QLD - 0.3 per cent vacancy rate at present
“The region's heavy investment in infrastructure, increasing employment opportunities, and its moderate supply level indicates rents will continue to rise over the next 12-24 months.
Queanbeyan, ACT - 0.1 per cent vacancy rate
“Rising rental demand, a lack of new housing supply and the region’s low unemployment rates are factors which will contribute to rising rent levels.”
Lake Macquarie - East & Kiama-Shellharbour, NSW - 0.2 and 0.3 per cent vacancy rates, respectively, at present
“Kiama-Shellharbour rates have been declining since early 2022, while Lake Macquarie - East has seen a downward trend over the past three years.”
Wagga Wagga, NSW - 0.4 per cent vacancy rate at present
“As supply remains at a low level, rent prices are likely to be pushed further up by the high market pressure.
“In the long term, Wagga Wagga's rent level has grown 29 per cent over the past decade, higher than the national average.”
Barossa, SA - 0.2 per cent vacancy rate
“New house builds account for 2.58 per cent of the total number of houses; however, this is not enough to keep up with rising rental demand.”
Yorke Peninsula, SA - 0.3 per cent vacancy rate at present
“As supply is staying at a fairly low level, rent is likely to be pushed further up by the high market pressure.
“Analysing growth over the past decade, Yorke Peninsula's rent level has grown 22.9 per cent.”
Warrnambool, VIC - 0.3 per cent vacancy rate
“Over the past year, rent prices have increased 10.5 per cent as a result of dropping vacancy rates.
“In the long term, it has also grown 40 per cent over the past 10 years.”
Shepparton, VIC - 0.5 per cent vacancy rates
“As the supply level remains low, rent levels are likely to be pushed further up by the high market pressure.
“Over the past decade, Shepparton has seen rent levels grow 38.5 per cent – much higher than the national average.”