December 2023
Rental Report

While it may have been another quarter of record rents for Sydney – firming the city’s status as the most expensive in which to rent – a clear slowdown in rental growth has become increasingly evident. House asking rents rose for the fourth consecutive quarter to reach a record of $730 per week. However, there was a deacceleration in growth for the second quarter in a row, rising at half the pace of the previous quarter. The continual rise has provided the longest stretch of annual increases on record (3.5 years), and while still double-digit, they have eased from the mid-2022 peak gains.

Sydney unit rents turned a corner over the December quarter to hold steady for the first time in two-and-a-half years at $680 per week. This breaks the longest stretch of rising asking rents in the city's history, following the previous nine quarters of consecutive growth. Annual gains have also lost momentum now at the slowest rate of increase since September 2022. The steady outcome of unit rents has further widened the price gap between property types for the second consecutive quarter but is still low relative to the past three years.

Sydney’s vacancy rate has jumped to a 12-month high of 1.3%. While a rise in the number of properties for rent is expected during the busy changeover period, it is set to be the city’s most competitive as the vacancy rate is at its lowest for the month of December.

Melbourne’s rental market turned a corner over the December quarter, with house and unit rents holding steady for the first time in just over two years. This ends the longest and steepest stretch of rising house and unit asking rents in the city's history, following eight quarters of consecutive growth. Annual gains have also lost momentum now at the slowest rate of increase since September 2022 for units. Despite the slowdown, rents remain at the record highs achieved in the previous quarter.

Flatlined house rents have been enough for Melbourne to regain its status as the most affordable city in which to rent a house (jointly with Hobart, which had stronger growth rates). Record rents are also helping to boost gross rental yields: units are at their highest point on record, and houses are at a seven-year high.

Melbourne’s vacancy rate has jumped to a 12-month high of 1.2%. While the rise in the number of properties for rent is expected during the busy changeover period, it is set to be the city’s most competitive one as the vacancy rate is at its lowest for the month of December.

Brisbane house rents rose to another record high over the December quarter, to reach $600 per week. They rose another 1.7% – the same as the previous quarter – providing persistent growth that has accelerated annual gains. Despite this, rental growth remains slower than seen throughout 2021-22.

Units continue the record-long and steepest stretch of rising rents in the city’s history following the 10th consecutive quarter of growth to produce another record-high median of $560 per week. However, the pace of quarterly gains has halved compared to the previous quarter, helping to slow annual increases marginally. Despite the slower pace of gains, it is still the third-fastest annual rise on record and enough to maintain Brisbane as the second most expensive city to rent a unit (jointly with Canberra).

Brisbane’s vacancy rate is 0.9%. A rise in properties for rent is anticipated towards the end of the year. While the vacancy rate has lifted slightly from February’s record low (0.6%), it remains stubbornly low and competitive for house-hunting tenants.

Adelaide houses continue the record-long stretch of rising rents following the 14th consecutive quarter of growth to produce another record-high median of $560 per week. Despite the persistent gains, the pace of quarterly growth continues to slow, now at its smallest increase in three-and-a-half years. Adelaide unit rents held steady over the quarter for the first time in a year at a record high of $450 per week. Despite the record, Adelaide is the most affordable city in which to rent a unit (jointly with Hobart), as rents have previously experienced more substantial growth in other capital cities.

Adelaide’s vacancy rate is stubbornly low at 0.4%. A rise in the number of properties for rent is anticipated towards the end of the year. While the vacancy rate has lifted from 2022’s record low (0.2%), it’s on par with the same time last year, showcasing that not much has changed – it’s still highly competitive for house-hunting tenants. Adelaide is the most competitive city for tenants, along with Perth.

Canberra house and unit rents increased for the first time in a year over the December quarter. House rents reached $680 per week, remaining $10 lower than the record high seen in March 2023. Unit rents returned to the record high of $560 per week, last seen in December 2022, recouping the loss observed throughout 2023. It is not surprising to see rents rise over the December quarter. Historically, Canberra tends to see higher rates of growth during this period, as vacated rentals are readjusted to market rate, and the seasonal impact of higher demand makes a mark.

Canberra is the only capital city to record lower house rents annually, and it’s the city’s longest stretch of decline since 2014 (the third consecutive quarter of an annual decline). Unit rents flatlined over the year to provide the most persistently stable conditions annually the city has seen.

Canberra’s vacancy rate reached a high of 2% in December. Technically, market equilibrium is met when the vacancy rate reaches between  2-3%, suggesting Canberra now has a better balance between landlords and tenants and is likely to present a more favourable changeover period for tenants. Depending on where the vacancy rate sits after the rental changeover, we will likely see more stable rents.

Perth’s rental market continues its record-long stretch of rising rents, as house rents rise for the ninth consecutive quarter and unit rents for the sixth. This has again produced record-high median weekly rents for houses at $620 and $520 for units. Despite the persistent gains, the pace of quarterly growth has slowed marginally, now at its smallest increase since September 2022 for houses and March 2023 for units.

In contrast to closing gaps in some other cities, the rental price difference between houses and units remains at its highest dollar figure on record.

Perth’s vacancy rate is stubbornly low at 0.4%. A rise in the number of properties for rent is anticipated towards the end of the year. While the vacancy rate has lifted marginally from November’s record low (0.3%), it’s on par with the same time last year, showcasing that not much has changed – it’s still highly competitive for house-hunting tenants. Perth is the most competitive city for tenants, along with Adelaide.

Hobart house rents returned to the record high of $550 per week, last seen in March 2023, recouping the loss observed throughout 2023. It was the largest quarterly gain of the capitals, and the strongest Hobart has seen since the March quarter of 2022. Despite this growth, house rents remained stable annually for the first time in three years.

Unit rents flatlined for the second quarter in a row, remaining $25 lower than the record high and providing the most stable conditions in more than five years. For the first time in roughly a decade, unit rents declined annually. This bucks the national trend to become one of two capitals not to have record unit rents (along with Darwin). This has led to the price gap between property types being at its largest dollar difference on record – last seen in June 2021 – with house rents $100 more expensive.

Hobart’s vacancy rate is at 0.8% – the third-lowest of the capital cities after Adelaide and Perth. However, this is above its record low of 0.2% in February 2022 and is the highest vacancy rate for the month of December.

Darwin’s median house rents remained steady for a third consecutive quarter, at the record first achieved in 2012. This is the longest period of stability seen over each quarter since 2014. Annual growth remains positive but continues to slow, providing the weakest gain since September 2022.

Unit rents rose over the quarter to their highest since 2014, at $540, only $10 below the previous record. Despite the rise, annual gains have slowed to the lowest since mid-2020. The price gap between property types is at its lowest in a year, with house rents $110 more expensive.

Darwin’s vacancy rate jumped to 1.7% in December. This is the highest since mid-2020 and the highest vacancy rate for the month of December since 2019.