After a tough few years of steep rent hikes and stiff competition to secure a property, renters are seeing glimmers of light at the end of the tunnel.<\/p>\n
The days of fast-growing asking rents are fading and prices may even fall in some cities this year, in the view of Market Economics managing director Stephen Koukoulas.<\/p>\n
The return to more normal migration patterns after the pandemic disruption combined with improving listings and housing supply should keep a lid on market rents, the economist said.<\/p>\n
“That sort of dynamic says to me that the rental market will ease throughout the year, which is good news for renters,” he said.<\/p>\n
CoreLogic’s gauge of market rents suggest conditions have been broadly flat in the second half of 2024, with small falls recorded in cities such as Melbourne\u00a0and Sydney.<\/p>\n
In December, the real estate data analysis firm recorded a mild 0.1 per cent lift in rents, to be 4.8 per cent higher over the calendar year.<\/p>\n
National rents are now growing at their slowest annual rate since March 2021 – a period characterised by weakness in the rental market in the early stages of the pandemic.<\/p>\n
While no longer rising rapidly, the 4.8 per cent annual increase in rents clocked in 2024 was still double the two per cent pre-pandemic average.<\/p>\n
Advertised price easing for new rentals has been leading the broader market, which typically happens with a lag as rents are re-evaluated with lease updates.<\/p>\n
CoreLogic head of research Tim Lawless expected market rents to hold flat throughout 2025, or potentially fall a little.<\/p>\n
Normalising migration patterns was part of the story as well as affordability constraints, with households reaching the limit of what they could afford to pay.<\/p>\n
He said rental affordability was the worst it had ever been, with the typical household spending about a third of their gross income on rent.<\/p>\n
This was fuelling a return to more occupants per property, somewhat reversing a COVID-driven preference for extra rooms and space to work from home.<\/p>\n
While capital city average household size remains below pre-pandemic levels, the latest analysis from the Reserve Bank of Australia has the measure trending higher.<\/p>\n
Mr Lawless expected that pattern to continue.<\/p>\n
“People that were utilising, say, a second or third bedroom for the home office are now probably more inclined to tenant that spare room, just to help them cover cost-of-living pressures,” he said.<\/p>\n
Rental vacancy rates have also been drifting higher, reaching a three-year high of 1.4 per cent in November.<\/p>\n
SQM Research managing director Louis Christopher says university students finishing their courses tend to push up vacancy rates at that time of year but broader market dynamics were also playing a role.<\/p>\n
At two per cent, Melbourne’s vacancy rate is now almost back in equilibrium, he said, with Sydney’s sitting at 1.8 per cent.<\/p>\n
“While we still have rental shortages in our two largest capital cities, the situation has clearly improved from the very difficult days of 2021 to 2023,” Mr Christopher wrote in a report.<\/p>\n