New record high rents across Australia

The median rent for both houses and units across Australia's capitals hit another all time high in the March quarter, per Domain.

In all capitals except Canberra, asking rents for houses have never been higher; for units, only Hobart has yet to hit a record high. 

The three months through December 2023 saw the pace of rental growth slow, but the pace has picked up once again, with the steepest quarterly gain for houses in 17 years observed in the first three months of 2024.

Despite this, Domain Chief of Research and Economics, Dr Nicola Powell, maintains rental conditions are still likely to ease later in the year.

"The first quarter of the year usually marks the rental change-over period, and we anticipated it would be one of the most challenging seasons yet due to the already low rental stocks," she explained.

"We remain optimistic that a tipping point will be reached in 2024.

"Some sub-markets will operate with more balance and rent growth will slow - some areas already show these signs."

Where can renters find hope?

The March quarter also saw declining vacancy rates in all cities except Hobart.

Sydney, Melbourne and Perth now have record low numbers of rental properties available, and Brisbane and Adelaide aren't far away either.

The numbers paint a bleak picture for Australian tenants who have had to cop unprecedented rent increases over the past eighteen months, but Dr Powell points to several indicators that could suggest light at the end of the tunnel.

"We are seeing the number of prospective tenants per rental listing ease, suggesting some pressure has been lifted," she said.

"This could be an early indicator of an increase in vacancy rates sometime this year."

The CoreLogic Home Value Index (HVI) showed a reacceleration of growth to the national median property price in Q1 after slowing slightly to finish 2023.

Per the ABS, first home buyer loans rose 4.3% in February, and were up 13.2% from February '23, so it's plausible extreme rental conditions are pushing more tenants into home ownership, in turn easing pressure in the rental market.

"The average loan size for first home buyer owner occupiers continues to trend higher dwelling price growth, but the number of loan approvals compares reasonably favourably to the prepandemic environment," said Taylor Nugent, NAB's senior market economist.

"Higher mortgage rates and affordability constraints are being offset by tightness in rental markets and underlying strength in housing demand."

Dr Powell said the expansion of Government incentives for first home buyers will further fast-track more Aussies currently renting into home ownership.

"Incentives in place such as Queensland doubling the first-home buyer grant and the Federal Government's 'Help to Buy' shared equity scheme will help transition some to being owners or fast-track others to a more affordable purchase," she said.

Many commentators have also attributed strong housing demand to strong net overseas migration numbers, and Dr Powell said there are signs this pressure will ease too.

"International student visa applications have turned a corner and started to fall for the first time in more than two years," she said.

In March, Education Minister Tony Burke said to expect "moderation" in the number of international students arriving after the Government adjusted the rules last year.

"There were significant changes we made there in terms of the integrity of the visa system and in particular in the integrity of the international education system," Mr Burke said at a parliament house press conference.

Picture by Joel Henry on Unsplash

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