The rental market in Australia is showing signs of slowing after years of significant growth. According to CoreLogic, national rents have flatlined in July and August, marking the weakest rental conditions since the early stages of the pandemic. Between August 2020 and June 2024, rents surged 39%, but now affordability constraints and slowing migration contribute to a shift in household dynamics.
As affordability tightens, many households are consolidating, reversing the trend of smaller household sizes that amplified demand during the pandemic. Additionally, net overseas migration peaked in early 2023 and has been slowing, further reducing rental demand. “With rental affordability so stretched, household formation patterns are once again evolving,” CoreLogic notes.
Despite the national slowdown, cities like Perth and Adelaide continue to experience the strongest growth, with annual gains of 11.6% and 8.4%, respectively, though even these markets are starting to show signs of deceleration.
The combination of affordability challenges, shifts in migration, and increasing supply from new dwelling completions and investor activity contribute to the current cooling of the rental market. It’s clear that the boom in rental prices is easing, and as household formations adjust, the rental landscape may continue to stabilise in the months ahead.
