CoreLogic: Rent rises could see more share houses
Household size shrank during the pandemic. Now, it seems, household size is growing again.
Residz Team 5 min read
National rents are 27.4% higher since the onset of COVID, equivalent to a $127 per week increase on the median dwelling rent in Australia.
And CoreLogic says it could lead to “a further uptick in household size” as more renters re-form share houses to cope with the increased rental burden. This could reverse the post-COVID trend of household sizes shrinking.
The latest CoreLogic Quarterly Rental Review released July 2023 shows the pace of quarterly rental growth continued to accelerate through April (2.8%) and May (2.8%) before easing to 2.5% over the three months to June.
Here’s a summary of the report’s key findings and its list of Australia’s most expensive 30 suburbs to rent.
National rents lift nearly 10% in a year
National rents rose 9.7% over the 2022-23 financial year, down from the record 10.2% lift seen over the 2022 calendar year.
National rental increases remain well above the decade’s average across all monthly, quarterly, and annual timeframes.
Tenants reaching their limit
The slight softening in rental growth occurred in spite of an ongoing surge in overseas migration and a continued short rental supply.
This suggests an increasing portion of tenants are reaching their affordability ceiling. There has been seen in an increase in average household size.
Rental listings still well down
Rental listings remain well below the previous five-year average, with a national shortfall of approximately -32.4% or 47,500 rental listings recorded for the four weeks to June 3.
Sydney, Melbourne and Perth have also seen total rental supply between -30% and -50% below the previous five-year average for this time of year.
On the other hand, markets like Hobart and Canberra, which typically receive a smaller portion of overseas migrants, have seen stock levels accumulate and vacancy rates rise, putting downward pressure on rental values.
Outside of migration, reasons for low supply include increases in the average rental hold period (tenants are staying put) and sustained undersupply of medium-to-high density development approvals.
As well, data suggests investors are putting their properties up for sale, possibly cashing out due to interest rate rises.
Gap closing between house and unit rents
While units remain the more affordable option, the continued preference for unit rentals has seen the gap between median house and unit rents shrink from $62 in December 2021 to just $34 in June.
Overseas migrants choosing to live in capital cities
Capital city rental growth (3%) continued to outpace the combined regionals (1.1%) over the three months to June.
Recent ABS data showed a strong surge in net overseas migration to NSW and Victoria, with the majority of migrants choosing to settle in Sydney or Melbourne upon arrival.
Similarly, strong net internal migration, coupled with an above average flow of overseas migrants has seen WA record the strongest population growth across the country.
Regional markets with biggest rent increases
Across the individual rest of state markets, Regional WA (2.6%) recorded the strongest rental increase over the three months to June, followed by Regional Victoria, Regional Queensland, Regional SA and Regional NSW up 1.5%, 1.5%, 1.4% and 0.3%, respectively.
Regional Tasmania was the only regional market to record a quarterly decline in rents, falling -
0.4% over the June quarter.
30 most expensive suburbs to rent in Australia
The 30 most expensive suburbs to rent in Australia are all in Sydney, mostly close to beaches.
Topping the list is Vaucluse, located in Sydney's affluent Eastern Suburbs. Renowned for its stunning coastal views, exclusive properties, and proximity to popular beaches, Vaucluse offers a luxurious lifestyle. With its prestigious reputation, it comes as no surprise that Vaucluse commands the highest rental fees in Australia.
The top 30 are:
1. Vaucluse - Eastern Suburbs - Houses $8,687 per week, units $2,692
2. Rose Bay - Eastern Suburbs - Houses $6,121 p.w, $2,270
3. Bellevue Hill - Eastern Suburbs - Houses $8,665 p.w., units $2,180
4. Balgowlah Heights - Northern Beaches - Houses $4,369 p.w., units $2,026
5. Clontarf - Northern Beaches - Houses $4,845 p.w., units $2,020
6. Clovelly - Eastern Suburbs - Houses $4,230 p.w., units $2,001
7. Dover Heights - Eastern Suburbs - Houses $5,981 p.w., units $1,996
8. North Bondi - Eastern Suburbs - Houses $4,340 p.w., units $1,930
9. Bronte - Eastern Suburbs - Houses $5,276, units $1,887
10. Woollahra - Eastern Suburbs - Houses $4,461, units $1,873
11. Bondi - Eastern Suburbs - Houses $4,090,units $1,840
12. Coogee - Eastern Suburbs - Houses $3,690, units $1,806
13. Seaforth - Northern Beaches - Houses $3,562, units $1,783
14. South Coogee - Eastern Suburbs - Houses $3,776, units $1,759
15. Queens Park - Eastern Suburbs - Houses $3,919, units $1,749
16. Northbridge - North Sydney and Hornsby - Houses $4,432, units $1,691
17. Paddington - Eastern Suburbs - Houses $3,216, units $1,664
18. Castlecrag - North Sydney and Hornsby - Houses $4,046, units $1,645
19. Fairlight - Northern Beaches - Houses $3,617, units $1,642
20. Bondi Junction - Eastern Suburbs - Houses $2,812, units $1,599
21. Randwick - Eastern Suburbs - Houses $3,205, units $1,594
22. Curl Curl - Northern Beaches - Houses $3,645, units $1,588
23. Burraneer - Sutherland - Houses $3,135, units $1,566
24. Castle Cove - North Sydney and Hornsby - Houses $3,605, units $1,553
25. Balgowlah - Northern Beaches - Houses $3,225,units $1,517
26. Collaroy - Northern Beaches - Houses $3,038, units $1,496
27. North Curl Curl - Northern Beaches - Houses $3,162, units $1,480
28. Freshwater - Northern Beaches - Houses $3,325, units $1,476
29. Little Bay - Eastern Suburbs - Houses $2,296, units $1,450
30. Bayview - Northern Beaches - Houses $2,788, units $1,437
The appeal of Sydney to renters
While the list highlights the dominance of Sydney's Eastern Suburbs and Northern Beaches in terms of high rental prices, it begs the question: Why is Sydney such a sought-after city for renters? Here are a few reasons:
Lifestyle and Amenities
Sydney boasts a remarkable lifestyle, combining city living with natural beauty. Its 60 world-class beaches, picturesque harbour, and expansive parklands lend themselves to a great outdoor lifestyle. Named as the best global city to live in, the city has a thriving cultural scene, with renowned galleries, theatres, and music venues attracting some of the world’s biggest shows. Renters are drawn to the cosmopolitan environment.
Economic Opportunities
Sydney serves as the economic hub of Australia, providing the bulk of top job opportunities across various industries. The city is home to major corporations, innovative startups, and a thriving business community. Renters are often attracted to Sydney's potential for career growth and the prospect of a higher income.
Education
Sydney boasts world-class educational institutions, including prestigious universities and top-ranked schools; a significant drawcard for families and international students. The demand for rentals in proximity near the top schools and unis drives up prices in nearby suburbs.
Infrastructure and Connectivity
Sydney has a well-developed infrastructure network, including efficient and varied public transport and a well-connected road system. The city's international airport will be supplemented with the new Western Sydney International (Nancy-Bird Walton) Airport in 2026 (see the recently released flight plans and noise maps).
Cultural Diversity
Sydney is renowned for its multiculturalism, with a rich tapestry of diverse communities and a wide range of cuisines, festivals, and cultural events. The city's inclusive and cosmopolitan atmosphere appeals to renters seeking a vibrant and diverse social fabric.
Climate
Like many of Australia’s cities, Sydney’s climate is perfect for city living - humid sub-tropical, with no extreme seasonal differences (as the weather is moderated by proximity to the ocean). People are drawn to the sunny climate of mild winters and warm summers, ideal for making the most of the outdoors.
About Residz
Residz specialises in all sorts of research that can help renters, buyers and sellers find out information about property.
- If you’re considering purchasing or renting any property, make sure you download the PEXA Property Report for that address. We have 12 million addresses in our database, with every report offering information on internet speeds, crime trends, bushfire and flood risks, investability scores and a whole lot more.
- Would you like to sell your home and connect with home buyers willing to pay your dream price? Residz has the solution, for zero dollars. Put a DreamPrice on your home to test interest. Read about DreamPrice(™) here.
Photo by Zach Reiner on Unsplash