Rent prices end 2020 with a bang, decade high growth

author-avatar By on January 27, 2021
Rent prices end 2020 with a bang, decade high growth

Rent prices across the country rose 0.6% in December, the biggest monthly increase in a decade.

CoreLogic's Rental Review for the December 2020 quarter shows Australia's rental market recorded the biggest monthly increase in prices since 2010, with rental rates rising 0.6% over the month nationally.

The 10 year record is mostly because rental prices for houses rose by 0.9% over the month, offsetting a -0.1% fall in apartment rents. 

Rentals in regional markets outperformed those in capital cities, with both house and unit rents finishing 1.1% higher in December. House rents rose 2.9% in the December quarter while apartment rents rose 2.6%.

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

CoreLogic's Head of Research, Tim Lawless said the COVID-19 pandemic has reshaped housing demand as people seek to move away from crowded inner city areas.

“Higher density housing markets have seen less demand during the pandemic; a trend that has been amplified by stalled overseas migration and remote working opportunities luring residents further afield," Mr Lawless said.

"Whether this trend has some longevity is yet to be seen, but international borders are likely to remain closed for some time yet, and for many, remote working conditions have proved to be productive.”

See also: The rise of regional property in COVID-19

This was reflected in weak conditions in unit rents as inner city apartment markets bear the brunt of reduced demand as a result of the pandemic. 

Capital city apartment rents fell by -0.3% over the month to be down by -1.6% over the December quarter. Meanwhile, house rents in capital cities rose by 0.7% in the month to be 0.8% higher overall in the December quarter.

Annually, apartment rents plummeted -4.6% in 2020 while house rents performed better, recording a 3.3% national rise.

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Sydney and Melbourne apartment rents plunge; regional markets soar

The inner city apartment markets in Sydney and Melbourne recorded the biggest falls, plummeting -5.7% and -7.6% over the 12 months to December 2020. 

However, Sydney apartments maintained their position as the nation's most expensive capital city to rent a unit, despite a $36 reduction in rental prices recorded in the year to December 2020.

Similarly, Melbourne has held onto its position as the third most expensive apartment market of the capital cities, behind Sydney and Canberra.

Meanwhile, rental prices in regional markets are soaring as Australians making a sea or tree change compete for rental properties. 

Perth and Darwin were among the best performing rental markets of 2020, with house rents in Perth recording double digit price growth over the year to December 2020 at 10.1%. Perth apartment rents also experienced strong growth, rising by 6.8%. 

In Darwin, rental prices for houses rose by 9.6% and units by 7.6%.

The remaining capital cities also recorded consistent rental growth over the year but the trend of houses recording higher growth than apartments remained evident. 

In Canberra, house rents rose 4.7% annually while unit rents rose by an incremental 1.5%.

This saw Canberra overtake Sydney as the most expensive capital city to rent a house in 2020, with a median rental value of $624 per week - $10 more expensive than the typical house in Sydney. 

Adelaide experienced similar rent movements to Canberra: house rents were up by 3.6% compared with a 1.4% rise in the apartment market.

Brisbane house rents rose by a marginal 2.7% while apartment rents fell -1.1%.


Photo by Tom Hill on Unsplash

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Emma Duffy joined Savings.com.au as a Finance Journalist in 2019 after spending a year as the editor of The Real Estate Conversation. She's passionate about empowering people to make smart financial decisions and improve the financial literacy of Australians by translating complex finance topics into understandable, relatable content.

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