Rental markets finish the year on a softer note

Key takeaways

Rental markets finished the year on a softer note, with the national rental index up just 0.1% in the month of December to be 0.4% higher through the December quarter and 4.8% higher over the calendar year.

The slowdown in rental growth is apparent across most capital cities and comes amid a reduction in net overseas migration, a trend towards larger capital city households and continued rental affordability challenges.

Rental markets finished the year on a softer note, with the national rental index up just 0.1% in the month of December to be 0.4% higher through the December quarter and 4.8% higher over the calendar year according to Corelogic.

Source: Corelogic January 2025

CoreLogic’s research director, Tim Lawless, said:.

“This was the smallest December quarter rise in rents since 2018.

On a rolling annual basis, we haven’t  seen an annual change this small since the 12 months ending March 2021, following the early COVID patch of weakness.”

However, the annual change in national rents remains more than double the pre-pandemic decade average at 2.0% per annum.

The slowdown in rental growth is apparent across most capital cities and comes amid a reduction in net overseas migration, a trend towards larger capital city households and continued rental affordability challenges.

The ACT and Hobart have bucked the trend, with rental growth rebounding through 2024 after a period of weakness.

“Hobart house rents have moved from being one of the weakest in 2023 when rents fell -3.6%, to one of the strongest in 2024 with a 6.4% increase,” said Mr Lawless.

Rental trends are likely to remain subdued in 2025 as overseas migration returns to more normal levels and the average household size continues to trend higher towards pre-COVID levels.

Rental affordability is also likely to remain a key challenge leading into 2025, with CoreLogic’s latest metrics showing a record level of rental unaffordability, with the median rent consuming a third of the median household income in September.

Rental Yields

With rental growth stabilising and housing values starting to edge lower, gross rental yields are unchanged relative to December 2023 at 3.69%.

Across the capitals, Darwin units saw the largest rise in gross rental yields through 2024, rising 47 basis points to 7.9%, followed by Melbourne’s unit sector with a 37-basis point rise in the gross yield to 4.8%.

The unit markets of Perth (-71 basis points), Brisbane ( -54 basis points) and Adelaide (-36 basis points) have seen the largest falls in gross yields over the year.

About Leanne Jopson Leanne is National Director of Property Management at Metropole and a Property Professional in every sense of the word. With 20 years' experience in real estate, Leanne brings a wealth of knowledge and experience to maximise returns and minimise stress for their clients.