The national rental index increased by 0.5% in August, the 36th consecutive month of increases, but the smallest month-on-month rise since November 2020.
In annual terms, national rents were up 9.0% in August which was the lowest annual rate of rental growth since April 2022, but still almost three times above the decade average of 3.2%.
Most areas around the country are clearly losing momentum in the pace of rental growth, however, some regions are bucking the trend.
Annual change in rents, Houses
Annual rental growth for Melbourne houses reached a new record high over the past 12 months, up 11.9%, although the rolling quarterly trend has been slowing since May.
Similarly, Perth unit rents have reached a new cyclical high in the annual growth rate, up 16.4%.
In good news for renters, the quarterly pace of growth across Perth’s unit sector has also been slowing since May.
Annual change in rents, Units
A slowdown in rental growth occurred despite rental vacancy rates tightening through the month
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The vacancy rate across the combined capitals fell to 1.1% which is around historic lows, while regional vacancies also trended lower, reaching 1.4%, the lowest since November last year.
Every capital city recorded a reduction in total rental listings over the past month, reinforcing ongoing concerns about a lack of rental supply.
With dwelling approvals continuing to trend lower, especially across the medium to high-density sector, the outlook for additional rental supply remains dim.
Rental vacancy rate
Since peaking in April at 3.89%, gross rental yields have been edging consistently lower, falling to 3.82% in August.
Lower gross rental yields are a symptom of housing values rising slightly faster than rental rates since May.
Gross rental yields, dwellings
With housing values continuing to rise and rental growth easing, it’s looking increasingly like we have moved through a peak in gross rental yields.
April’s gross yield peak of 3.89% was roughly in line with the decade average of 3.88%.
Considering the higher cost of debt alongside higher taxes in some states and less depreciation benefits, it’s likely net rental yields have compressed further.