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Rent prices skyrocket as Australia endures COVID-19 outbreak

·3-min read
A 'for rent' sign in front of an apartment block and a row of townhouses in Sydney
Rent prices across Australia have risen at the highest rate in over 10 years (Source: Getty)

Australia’s rental prices have grown at an annual rate of 6.6 per cent, the highest since January 2009, at a time when home prices are soaring and the nation struggles with more pandemic-induced lockdowns.

CoreLogic’s Rental Review for the June 2021 quarter shows regional rents continued to outpace capital city rents, rising by 2.7 per cent, compared to a 1.9 per cent rise in capital cities.

Despite the easing in growth in recent months, regional Australia’s annual rental growth hit 11.3 per cent in June 2021. This is the highest annual growth result on record, with the CoreLogic rental index commencing from 2005.

CoreLogic’s Head of Research Australia, Eliza Owen, said Australia has not seen rental value increases this high for over a decade.

“Following subdued rental performance through much of the 2010s, the Australian rental market has seen an increase in values due to many of the same factors that have led to the current housing price upswing,” she said.

“These factors include increased government stimulus through COVID-19, accumulated household savings through lockdown periods, the swift economic recovery seen as restrictions eased, and a lack of rental supply in some markets have also exacerbated rental price increases, particularly in major centres of regional Australia.”

Owen said rent prices are seeing a deceleration in growth, much like house prices, at a national level and across capital cities.

“This may reflect affordability constraints, but there could also be higher levels of rental supply as investor activity in the market increases,” Owen said.

Rent changes across the capital cities

Despite the strong national and combined regional figures, a closer look at rental value change by capital city tells very different stories.

Change in rents over the year ranged drastically from 21.8 per cent growth in Darwin, to being down 1.4 per cent in Melbourne.

Canberra remains the most expensive city to rent, with Adelaide the most affordable.

Owen said despite the increases across the country, there is probably only so far rent prices can go until they reach their peak.

“Overall, I think we can expect a similar outcome for the Australian rental market as the purchasing market. Very high rental growth is unsustainable while income growth remains subdued,” she said.

The result will likely be more subdued growth rates in the coming quarters, especially as investor participation trends higher, delivering more rental supply.”

Aussies struggle in fresh lockdown

This data comes out as the country struggles with the spread of the COVID-19 Delta variant which has caused many businesses to halt and workers to lose paid work.

The Government announced an increase in COVID-19 relief payments to those affected, but some say they’re not enough.

Unions have warned that confusing messaging around who is and who isn’t an essential worker has left vulnerable workers faced with impossible choices and have called on authorities to draw a line.

In addition, credit rating agency Fitch said low interest rates in Australia have also started encouraging investors into the housing market, potentially pricing out first home buyers.

“Government programs, such as support for FTB in Australia, have also incentivised purchases,” the Fitch ratings report said.

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