Some city suburbs are recording a lull in rents even as property prices take off again, as cash-strapped tenants curb landlords’ ability to push rents higher.
While rents are at record highs in most state capital cities, the pace of increases in most city suburbs has slowed, stalled, and in some cases reversed, according to a new report by property portal Domain.
Domain’s chief of research and economics, Nicola Powell, said there were early signs of easing in Australia’s tight rental market.
“The data signals a much-needed pause for renters, and shows the market is shifting,” she said.
“Cost of living pressures have reached a tipping point. Renters are maxed out and landlords are being forced to hold steady.
“We’re also seeing a shift in demand – renters are downsizing or choosing units to stretch their budgets, which is why unit rents are now rising faster than houses.”
Tenants have been through a tumultuous five years, marked by a period of rapid rent hikes from 2021 to 2023. While the pace of increases has now moderated, rents remain at elevated levels.
Domain data shows that the median rental asking price for houses, measuring all suburbs across all state capital cities, did not change over the past 12 months, remaining at $650.
For units, the median rent increased 3.2% to $650, compared with $630 a year ago.
Chris Martin, a housing policy expert and senior research fellow at UNSW’s City Futures Research Centre, said renters had endured extreme increases in recent years.
“Many had just about as much as they could take,” said Martin.
“We are kind of on the other side of those big increases, but rents are still up and people are still doing it very tough.”
Martin said many “tapped-out renters” were unable to handle further rent hikes, testing landlords’ resolve to push prices higher.
The slowing rate of rent increases has also been linked to several other factors, including new laws in some states determining how and when rents can be raised, along with stronger protection against evictions.
As property prices rise again, investors have also been buying up at auctions, leading to more rentals hitting the market in sought-after locations, putting downward pressure on prices.
The Sydney suburbs of Enmore, Forestville and South Hurstville were among those to record annual falls in apartment rent prices, while house rents dropped in several high-end locations, including Edgecliff, Bondi Junction and Cammeray.
Unit rents in Melbourne city were flat over the year, and fell in Ivanhoe East, while house rents dropped in several suburbs including Beaumaris and Glen Iris.
Perth’s rental market has remained very tight, with the high-end City Beach and Mosman Park among a small number of suburbs to record a fall in house rental prices.
The owner of suburb profile site Suburb Advice, Sam Saket, said there had been some rental reprieve in “lifestyle” locations such as beach and harbour-side suburbs.
Some of this trend is attributed to owners shifting their properties into the general rental market amid a backlash from residents against short-term rentals.
“It’s becoming a tenant market where you can negotiate the price, but only slightly,” Saket said.
