While our property markets have boomed over the last year with the strongest rebound in property values for decades, the rental property market has been more subdued.
Domain's recent Rental Market Report gives a great insight into what's happening in our property markets around Australia.
And there have been some significant changes across the country.
Sydney
House rents hit a new record high:
- House rents increased over the quarter for the first time in a year. They are now at a new record high of $580 a week, jumping $30 over the September quarter.
- Unit rents increased over the quarter for the first time in a year-and-a-half, by $15. However, they remain $65 lower than the mid-2018 record high, at $485.
- It is the strongest quarterly gain since 2008 for houses and 2017 for units.
- This marks a stark turnaround in declining unit rents and stability for house rents.
The days of negotiating lower rents look to have passed as rents begin to rise as Sydney’s rental market turns a corner according to the Domain Rental Market Report.
It’s clear that tenants are willing to pay a premium for space, as house rents leap to a new high and rise at a faster pace for rentals with more bedrooms.
Sydney’s vacancy rate has dropped below pre-pandemic levels - the lowest since late-2018 - resulting in reduced rental choice and providing grounds for landlords to raise asking rents.
It is playing out across rentals on Domain, as more landlords opt to hike rents during the advertising campaign, which points to further increases on the horizon.
With the prospect of international borders reopening, tenants could be in a vulnerable position, facing increased competition that could push rents even higher.
Particularly as soaring house prices have become a barrier for tenants to purchase, keeping them renting for longer.
However, investors have been enticed back to the property market by capital growth and improved rental conditions - investment home loan values recently reached the highest since 2017 - which will boost supply and should help contain rent growth.
Melbourne
Melbourne is the most affordable city to rent a house:
- House rents continue to hold over the quarter at $430 a week, making Melbourne the most affordable city to rent a house for the first time on record.
- Unit rents increase $5 over the quarter for the first time since pre-pandemic March 2020 however, they remain $60 below the March 2020 high, at $370. This is a significant shift following a substantial period of tumbling unit rents.
- Rents have grown or held over the quarter across all regions, apart from units in Melbourne’s inner south.
- House and unit rents in the outer east, southeast, and Mornington Peninsula are at record highs.
Tenants have grappled with the longest lockdown of any city in the world. 
This has placed the need for space at the top of the wish list, creating a near-record price gap between house and unit rents.
Overall Melbourne continues to record weak rental growth becoming a renters’ market the closer to the city, a positive for tenants looking for more affordable rentals according to the Domain Rental Market Report.
That being said, unit rents made the first quarterly rise since pre-pandemic March-2020.
This is significant because with unit rents now rising faster than houses, it signals that the worst has passed for landlords.
So for tenants, now is the time to secure a deal in those areas that have seen a significant drop in rent, because while overall unit rents are the same as they were in 2015, vacancy rates have continued to decline, suggesting the empty pool of rentals will continue to shrink and prices will not stay this low for very long.
Brisbane
House and unit rents both hit record highs:
- House and unit rents increase $10 over the quarter to new record highs, at $460 and $410 respectively.
- This is the longest period of rising house rents in 14 years, following five consecutive quarters of rent growth.
- Unit rents have increased faster than houses over the quarter, a shift following almost a year of stronger house rent gains.
- All regions across Greater Brisbane are at record high house and unit rents.
Brisbane house rents have risen for five consecutive quarters, consistent growth not seen since 2007.
It appears the pace of growth has peaked, with a more subdued growth rate anticipated moving forward. 
Unit rents are back on the rise following half a year of steady rents according to the Domain Rental Market Report.
It is a challenge for household budgets as rents have risen faster than wages growth.
This has financially squeezed tenants unable to afford a house lease to opt for a unit, to stay within budget to be in the preferred location.
The tight rental market is widespread across Greater Brisbane, as all regions are at record high asking rents.
More investment activity has started to bring greater rental choice as the vacancy rate edges up from its multi-year July low.
While it remains a landlords’ market, a bigger pool of rentals will be a welcomed relief for renters.
Adelaide
Tenants face tight rental conditions as rents reach a record high:
- Houses reach a new record high at $440, following five consecutive quarters of rising rents. This has resulted in the strongest annual increase in 14 years.
- Unit rent growth appears to have peaked as rents hold at a record high of $350.
- House rents continue to increase faster than units over the quarter, a trend that has earmarked the past year.
Adelaide tenants face one of the most competitive capital city rental markets in Australia according to Domain's Rental Market Report.
While it has been a landlords’ market for a number of years, conditions have become fiercely competitive as the vacancy rate hits a multi-year low in September. 
This has resulted in record-high house and unit rents.
House rents have grown faster than units over the past year, although the growing price gap could stretch household budgets, pushing demand to units.
To place this into context, for the first time on record house rents are now more expensive than Melbourne, meaning Adelaide is no longer Australia’s most affordable city to rent a house.
Demand for rentals has surged over the past year as more people decide to relocate south.
The flow of residents away from Adelaide has previously been a drag on the demand for housing, but Adelaide has netted its first positive flow of residents since 2002.
- Also read:Latest property price forecasts for 2024 revealed. What’s ahead in our housing markets in the next year or two?
- Also read:This week’s Australian Property Market Update – Latest Data, State by State April 23rd 2024
- Also read:Melbourne property market forecast for 2024
- Also read:Brisbane’s property market forecast for 2024
- Also read:Sydney property market forecast for 2024
While investment activity has risen it has been no match for rising demand.
Canberra
Canberra is the nation’s most expensive capital to rent:
- House and unit rents achieve a new record high and experience the strongest annual growth in 14 years
- For houses, the rate of quarterly growth has halved compared to last quarter while units have accelerated.
- House rents are up 37.2 per cent and units 30 per cent over five years, this is the second steepest increase of all the cities.
- Rents are at record highs across all regions apart from houses in the inner north.
During Canberra’s lockdown, the vacancy rate lifted momentarily as the availability of rental supply increased.
This alignment to lockdown suggests short-term holiday leases were converting to longer-term rentals.
It does appear to be short-lived, partly reversing by the end of September, although remains slightly higher than prior to lockdown according to Domain's Rental Market Report.
It also coincides with rising investor interest, with the share of investment home loans reaching its highest point in roughly three-and-a-half years.
The lift in available rental properties has done little to quell rising rental prices over the September quarter, as new record asking rents have been reached for house and unit rents.
While asking rents for houses are still rising, it has halved compared to last quarter.
Stretched budgets could be steering demand towards units, as the pace of quarterly growth increases.
No matter the property type, tenants face the highest capital city rents.
The higher holding costs associated with rates and land taxes are likely to be being passed onto tenants, but it is clear the nation’s capital needs to attract investment activity to address supply.
Perth
Perth’s rate of rent growth has passed its peak:
- House and unit rents hold over the quarter, remaining at a six-year high of $450 and $380 respectively.
- Steady asking rents are a marked shift from the recent rapid growth of the prior four consecutive quarters, this suggests that the peak rate of growth is behind.
- House rents are $40 lower and unit rents $70 lower than the 2013 highs.
The swift recovery in Perth’s rental market came to an abrupt halt over the September quarter as rents stabilise; a marked change from the past year that saw the biggest upward movement in asking rents in more than a decade.
The ability to secure a lease is still tough for tenants who are operating in a landlords’ market.
The ending of the rental moratorium will have resulted in a shift in tenancies, as renters unable to afford market-rate rent move to find cheaper alternatives or house shares.
This may have reduced rental demand, along with more tenants becoming homeowners.
The additional rental demand from internal migration reached its highest point in eight years - while there remains a positive inward flow into Perth, it looks to be easing.
It has also been met with higher investment activity - roughly one-fifth of the value of home loans is for investors, providing the highest share of mortgages since 2018.
If investment activity continues to bring new rental stock rather than a change in landlord, tenants should be provided a little relief.
Hobart
Hobart rents stabilise as its incredible peak growth passes:
- For the first time in a year, house rents hold over the quarter.
- House rents remain at a record high $495, an outcome reached across all regions.
- Unit rents are steady at $400, $20 lower than the record high achieved earlier in the year.
- House rents are up 50 per cent and units 42.9 per cent over the past five years - this is the steepest increase of all the cities.
Hobart is the tightest rental market of all the capital cities, with tenants operating in a landlords’ market for multiple years.
Tenants have been accustomed to little rental choice with the vacancy rate firmly stuck in extremely tight conditions.
Population growth has been a key factor, placing additional demand on housing, although looking at the internal flow of residents now, more are leaving Hobart than are arriving, a key theme since mid-2019.
Conditions could start to ease as more investors set their sights on the Tasmanian capital.
Investors are making up roughly 30 per cent of new home loans in the state, the highest share in about seven years - this will boost rental supply but new lending rules being implemented by APRA are likely to dampen highly leveraged investment activity, stalling rental supply that’s crucially needed in Hobart.
Darwin
Darwin asking rents reach the highest point in six years:
- Darwin asking rents reach their highest point in six years;
- House rents have produced the strongest annual growth in 9 years and for units in 12 years.
- Asking rents have seen the steepest increase since pre-pandemic March, up 29.2 per cent for houses and 23.7 per cent for units.
- Investors will find Darwin to be the highest gross rental yielding capital city.
- Sharply rising rents have boosted gross yields to the highest ever recorded across the capital city unit rental markets.
Darwin’s rental market has made a swift recovery since the beginning of the pandemic, producing the strongest upswing in asking rent of all the capital cities.
Gross rental yields have continued to improve, illustrating that rents are increasing faster than purchase prices according to Domain's Rental Market Report.
This could signal an element of temporary demand as residents opt to lease rather than buy.
The vacancy rate has increased from May’s multi-year low as a result of rising investment activity.
This temporary nature of demand is also confirmed by recent population data, which shows the flow of residents away from Darwin is once again negative.
Source: Domain Rental Market Report September 2021
ALSO READ: A landlord’s guide to rent increases
