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National rents record highest annual growth in over a decade - featured image

National rents record highest annual growth in over a decade

While rental growth is slowing, we've still experienced the highest rental growth in over a decade.

Rental PriceGrowth in rental rates eased over the second quarter of 2021, with the national rental index rising by 2.1% over the 3 months to June compared to a 3.2% rise over the March quarter.

While rental growth has slowed over the recent months and quarters, the latest figures take national rental rates 6.6% higher over the year; the highest annual growth in dwelling rents since January 2009.

Regional rents continued to outpace capital city rents over the second quarter of 2021, with regional dwelling rents rising by 2.7% against a 1.9% rise in capital city rents.

This was a 1.4 percentage point reduction in the rate of growth quarter on quarter for the combined regionals, and a 1 percentage point reduction for the combined capital cities.

Despite the easing in growth in recent months, regional Australia recorded an annual rate of rental growth of 11.3% in June 2021.

This is the highest annual growth result on record, with the CoreLogic rental index commencing from 2005.

The weakest rental markets over the quarter were in Melbourne (0.6%), Canberra (+1.6%), and Sydney (+2.0%).

Melbourne is now the second cheapest rental market, with typical dwelling rents coming in at $444p/w, this is only $14 more than Adelaide where capital city rents are the lowest.

At the opposite end of the spectrum, the strongest rental growth was seen across Darwin, with dwelling rents up 4.5% over the quarter.

To rent a typical dwelling across Darwin would require $548p/w, the third most expensive of the capital city dwelling markets, after Canberra at $620p/w and Sydney at $582p/w.

National Overview

  • Australia MapNational rental rates rose by 2.1% over the second quarter of 2021; easing from the 3.2% rise over the March quarter.
  • Capital city house rents were up by 2.2% over the three months to June 21 compared to a 1.3% lift in unit rents.
    Regional house rents rose by a higher 2.7% and units 2.9% over the quarter.
  • Canberra remains the most expensive capital city to rent, with a house typically costing $668p/w to rent and $521p/w for a unit.
  • Darwin houses and units recorded the strongest growth in rents over the June quarter, up 5.0% and 3.9% respectively.
  • Melbourne recorded the weakest growth in rents over the three months to June 21.
    House rents were up 1.1% across the region, while unit rents saw no change over the quarter.
  • National gross rental yields were recorded at 3.41%, down from 3.55% over the March quarter and 3.73% a year earlier as dwelling values outperform rental growth.
  • Gross rental yields were lower across all capital cities over the quarter, the largest decline was across Hobart down 31 basis points to 4.19%.
  • Darwin remained the highest yielding capital city with houses producing a yield of 5.58% and units 6.94%. This was higher than one year ago.


Houses v Units

Houses Vs UnitsAcross the individual property types, houses continued to outperform unit rental growth in Q2, with national house rents rising by 2.3% and units a lower 1.6% over the quarter.

This was a lower rate of rental growth when compared to the previous quarter when house rents rose by 3.5% and units by 2.5%.

Rental growth has slowed for both houses and units across the combined regional areas, and combined capital cities over the latest quarter.

The weakest rental growth was seen across capital city units, up 1.3%, compared to a 2.2% rise in capital city house rents.

In contrast, regional markets are showing stronger growth across the unit market relative to houses.

Regional unit rents have risen by 2.9% against a 2.7% rise in house rents.


Over the year to June 2021, the combined regional rental index recorded its highest rate of annual growth for both houses and units.


House rental rates rose by 11.3% annually, versus an 11.4% lift in unit rents.

Meanwhile across our combined capital cities, results across the individual property types continue to produce mixed results, with a 7.7% lift in house rents compared to a -0.8% reduction in unit rents.

This is largely driven by our two largest capital cities of Sydney and Melbourne, where unit rents are -1.1% and -6.4% lower year-on-year.

Sydney and Melbourne continue to feel the impact of COVID-induced restrictions and international border closures, as the loss of overseas migrants who usually occupy inner-city rental markets has weighed on rental demand over the year.

Melbourne and Sydney units were the only two capital city markets to record a reduction in rents over the year to June 2021.

However, the cities are showing signs of recovery as the rate of decline eases from the previous March quarter when a larger -4.9% reduction in annual unit rents was recorded for Sydney and -8.2% in Melbourne.


Across the individual capital cities, Darwin is showing the strongest rental growth for both houses and units.

House rents across the region have risen by 5.0% over the June quarter and unit rents are 3.9% higher.

This has slowed from the previous quarter where rental growth for houses was 8.2% and units 7.0%.

Darwin house and unit rents are now 23.6% and 19.2% higher than they were a year ago.

In terms of dollar value, Canberra is the most expensive capital city to rent both a house and a unit with the typical house costing $668p/w and a unit $521p/w.

This is $22 higher than a typical Sydney house and $3 more than a unit across Sydney.

The cheapest capital city rental market is Adelaide where the median rental value for houses is sitting at $448p/w currently and the median unit rent is $365p/w.


Rental Yields

National gross rental yields saw further compression in June as dwelling value growth outpaced rental growth.

Despite national rents rising by 2.1% over the 3 months to June, dwelling value growth was almost double this at 6.1% over the quarter.

This saw gross rental yields compress further.

National rental yields were recorded at 3.41% at the end of June 2021, down 14 basis points on the March quarter (3.55%) and 32 basis points lower than a year earlier (3.73%).

Across the combined capital cities, gross rental yields were recorded at 3.12% in June 2021 compared to 3.25% the previous quarter and 3.44% a year earlier.

YieldGross rental yields across the combined regional markets came in at 4.51% in June 2021, down from 4.69% the previous quarter and 4.93% a year earlier.

Gross rental yields across the individual capital cities at the end of June 2021 were recorded at 2.56% in Sydney, 2.83% in Melbourne, 4.11% in Brisbane, 4.23% in Adelaide, 4.33% in Perth, 4.19% in Hobart, 6.08% in Darwin and 4.20% in Canberra.

All of the capital cities recorded lower yields over the latest quarter compared to the previous quarter.

The largest decline in gross yields was recorded across Hobart, down 31 basis points over the quarter to 4.19%.

On a yearly basis, yields are currently lower across all markets when compared to the same quarter in 2020, apart from Darwin where yields are 22 basis points higher than a year ago.

Darwin has seen dwelling value growth of 21.0% over the year to June 2021, compared to a 21.8% lift in rental rates.

Darwin remained the highest yielding capital city in June.

Sydney continues to produce the lowest yields of the capital city markets, compressing further in June to 2.65% from 2.92% a year earlier.


Rolling quarterly change in rental values

Chart6 Chart7 Chart8

About Eliza is head Of Residential Research Australia for Corelogic and a respected property market commentator. Eliza holds a first class honours degree in economics from the University of Sydney
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