Unit rents across Australia have recorded the steepest annual fall on record, reaching the lowest price since early 2014, Domain’s December 2020 Rental Report has revealed.
Prices dropped the most in Sydney, with unit rents falling 5.1 per cent in the December quarter, and nearly 8 per cent across 2020. Now, a unit costs around $470 per week to rent in Sydney - just $70 more than Brisbane.
“The divergence of house and unit rents [in Sydney] has resulted in the largest price gap on record,” Domain senior research analyst, Nicola Powell said.
“The pandemic-induced collapse to overseas migration and foreign student numbers has reduced rental demand.
“Units have felt the impact, particularly inner-city apartments, which are home to more rentals and have a greater exposure to demand sourced from overseas migrants.”
The same is true of Melbourne, which also recorded steep falls in rent prices, with the median falling 3 per cent in the December quarter and 7.6 per cent across 2020.
Now, renters looking to inner Melbourne, or the inner east and inner south stand to save between $25 to $80 per week to rent a unit, and $20 to $45 to rent a house compared to December 2019.
With median rent prices falling to $388 per week, Melbourne is now the third-most affordable capital city to rent a unit, after Adelaide and Perth, for the first time in five years. It’s now more expensive to rent a unit in Brisbane than in Melbourne.
Canberra is the most expensive city to rent a unit in, with median rents at $495 per week - that’s $25 more expensive than Sydney.
“This is the first time in a decade Canberra has the highest unit rents of all the capitals,” Powell said.
House rents on the rise
On the other hand, house rents in all capital cities bar Darwin, Perth and Hobart have recorded their highest asking price since Domain records began in 2004.
You’ll need to fork out $550 per week to rent a house in Sydney, up from $525 in 2019. In Melbourne, house rents are around $440 per week, but it’s Canberrans who need to fork out the most: a whopping $600 per week.
“Canberra remains the most expensive capital to rent a house and is now the most expensive city to rent a unit,” Powell said.
Powell said tenants in Canberra will find house hunting tough, and said many would need to resort to offering above the asking rent price to secure a lease.
House prices to start 2021 strong
For vendors, the Australian housing market is looking up, CoreLogic’s latest house value index revealed in January.
House prices recorded their third consecutive month of gains in December last year, with the national home value index finishing 3 per cent higher overall, despite suffering a 2.1 per cent drop in prices during the pandemic.
“Record low interest rates played a key role in supporting housing market activity, along with a spectacular rise in consumer confidence as COVID-related restrictions were lifted and forecasts for economic conditions turned out to be overly pessimistic,” CoreLogic’s research director, Tim Lawless said.
However, containing the spread of the virus will be critical to Australia’s housing market resilience, and prolonged border closures will continue to be a headwind to rising values.
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