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Rental markets tighten over April with higher rents

key takeaways

Key takeaways

Capital city rental markets continued to tighten over April, with the record low vacancy rates still falling.

Demand for rental homes will continue to increase over 2022 driven by strong economies, the easing of covid restrictions and concerns, and the return of high levels of migration and students – all set to exacerbate a chronic undersupply of rental accommodation.

Higher rents and strengthening returns for investors are a clear consequence of a current extreme mismatch between supply and demand in home rental markets

Capital city rental markets have continued to tighten over April with the record low vacancy rates still falling, predictably placing more upward pressure on already high rents.

The national weekly median asking house rent has increased by 14.8% over the past year to $521, with the April house vacancy rate declining to 1.2%.

Median Asking Rents April 2022

All capitals have recorded significant increases in monthly asking house rents over the year ending April 2022, with Sydney the highest up 22.8% followed by Canberra higher by 14.5% and Adelaide up 11.9%.

Vacancy rates for houses remain at record lows and still falling generally with Melbourne, although still the highest, steady at 1.9% over April.

Other capitals with the exception of Perth and Sydney continue to report vacancy rates below 1.0%.

Canberra continues to report the highest capital city weekly house rents steady at $700 over the month followed by Darwin at $630 and Sydney again rising to $620.

Brisbane has the most affordable weekly house rents steady at $450 over April.

Units Median Asking Rents April 2022

Unit rentals have also recorded strong increases generally over the past year with the April national median weekly asking rent for units at $462 - an annual increase of 12.0%, with the national vacancy rate for units falling to 2.1% over the month.

All capitals have reported increases in unit rents over the year to April with Darwin reporting the sharpest increase - up by 17.8% followed by Sydney up 15.6%.

Capital city vacancy rates for units have continued to fall over April, with Sydney and Melbourne down again to 2.3% and 3.0% respectively.

Similar to houses, Canberra again reported the highest weekly asking rents for units over April but again steady at $550, with Adelaide the most affordable but higher at $390.

Demand for rental homes will continue to increase over 2022 driven by strong economies, the easing of covid restrictions and concerns, and the return of high levels of migration and students – all set to exacerbate a chronic undersupply of rental accommodation.

Higher rents and strengthening returns for investors are a clear consequence of a current clear and likely extreme mismatch between supply and demand in home rental markets.

Higher mortgage interest rates for investors are also likely to be passed on to tenants providing more upward pressure on already high and rising rents.

About Dr Andrew Wilson, Chief Economist of www.MyHousingMarket.com.au is widely regarded as Australia’s leading property economist.
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