Source: CoreLogic

Monthly rental growth hits lowest rate in four years as capital city demand declines

The Australian rental market has experienced its slowest growth in four years, with CoreLogic’s monthly Chart Pack showing a modest 0.1% increase in national rents during July.

CoreLogic Australia economist Kaitlyn Ezzy said the easing in the monthly growth trends marks a stark contrast to the 39.7% surge in rents recorded over the past five years.

“July’s small rise in national rents signals a broader cooling trend across the country and will provide some renters a much-needed respite after years of high demand and steep increases,” she said.

Results were varied across the country with rents rising 0.6% in Adelaide and 0.3% in Melbourne and Perth, while remaining flat in Darwin and Canberra. In contrast, rents have declined in Sydney (-0.1%), Brisbane (-0.1%), and Hobart (-0.3%).

At an annual level, CoreLogic’s Rental Value Index recorded the smallest 12-month change in three years, with national rents up 7.8% in the year to July, down from a recent peak of 8.6% in April.

This slowdown is largely driven by a reduction in growth rates in the capitals, from 9.7% in February to 8.0% in July, while regional areas have seen growth accelerate from 5.4% to 7.1% over the same period.

“The high cost of renting is also likely to be motivating more people with the financial means to service mortgage repayment and job security, to buy their first home, and we’re also seeing investors take notice too.”

Lending to first-home buyers rose 1.5% to $5.3 billion in June, to comprise 29.2% of new owner-occupier finance.

Similarly, new housing lending increased in June, up 1.3% to $29.2 billion, driven by a 2.7% rise in investor lending, with investors motivated by capital gains rather than high rental returns.