Renters across Australia are unlikely to see a return to cheaper rents despite a recent slowdown in rental growth. According to experts, a significant decrease in asking rents would require dramatic shifts, including substantial interest rate cuts, a surge in new housing, and slower population growth.
The latest Domain Rent Report shows that house rents in capital cities have soared to $650 per week, up from $430 five years ago, while unit rents have climbed to $630 per week. These increases are particularly sharp in cities like Sydney ($775 per week for houses), Melbourne ($580), and Brisbane ($625).
PRD Chief Economist Dr Diaswati Mardiasmo noted that while some areas have seen rents stabilise or even drop by up to 10%, a broad decline back to pre-COVID levels is “quite unrealistic.” The rise in holding costs, such as mortgage repayments, council rates, and insurance, have made it difficult for landlords to lower rents.
Experts agree that a large-scale increase in housing supply is crucial to bring down rents, but as Dr Peter Tulip of the Centre for Independent Studies highlighted, “We would need to build hundreds of thousands, if not millions, of new homes.” He points to Auckland, where loosening zoning restrictions led to a 28% reduction in rents, as an example of increased supply’s impact.
Ultimately, while the demand for housing remains high and population growth steady, the outlook for falling rents remains distant. As noted by BIS Oxford Economics’ Sean Langcake, “It’s more a question of how quickly rents are going to go up, rather than when they are going to go down.”
