Key takeaways
Rent growth has slowed in every capital city market except Hobart, with rent values declining in Sydney for a second consecutive month. The slowdown is likely attributable to a combination of supply and demand factors.
Net overseas migration has dropped, and international student arrivals have also fallen. Average household size has also increased, suggesting share housing may be back on the rise.
Rent yield dynamics are changing, with Brisbane and Adelaide rent yields on par with Melbourne, and Perth rent yields showing a substantial decline. This may slow investor interest in high-growth cities.
Relief for renters is in sight as rent growth slows to a halt.
The national CoreLogic hedonic rent index was unchanged for a second consecutive month in August, and rent values declined in Sydney for a second consecutive month.
While monthly results are subject to seasonality, the annual growth trend also shows a consistent slowdown in rent rises.
Nationally, rent values were up 7.2% in the year to August, which is the lowest annual growth rate since May 2021.
Annual rent growth is now slowing in every capital city market, except for Hobart, which is coming off a dip in rent values through 2023.
The slowdown in rent growth is likely attributable to a combination of supply and demand factors
On the demand side, net overseas migration has dropped, with ABS data showing a decline from 165,000 in the March quarter of 2023 to 107,000 in the December quarter, and overseas arrivals data suggests a fall in international student arrivals.
Additionally, the latest RBA reporting on average household size showed a slight uptick, suggesting share housing or multi-generational family homes may be back on the rise in response to high rents.
On the supply side, investor trends vary from state to state, but nationally investor loans secured were up 10.7% in the year to June.
Dwelling completions remain an issue, with a strained construction sector keeping a floor under both rent and purchase prices.
Rent yield dynamics are also changing, which could shape future investor activity.
For the first time in the history of the CoreLogic gross rent yield series, Brisbane and Adelaide rent yields are on par with Melbourne, at 3.7%.
Gross rent yields in Perth are also showing a substantial decline, from a recent high of 4.8% in June 2023 to 4.3% in August.
Yield compression is common when values are rising strongly, which may slow investor interest in high-growth cities.
However, many investors are attracted to long-term prospects for capital growth over high-rent returns.
- Also read:Auction Report Sep 7th 2024 | Spring Weekend Auction Market Officially Begins with Mixed Results
- Also read:Does the lower inflation figure mean rate cuts are coming soon? | Property Insiders
- Also read:The latest Corelogic Rental Market Report
- Also read:Latest Stats: Growth cools in Australian housing values through winter as Melbourne median slips below Perth and Adelaide
- Also read:Home Prices Mostly Higher Over August | Latest Housing Market Stats
