Rental Battle: Rental Growth Trends and Their Effects on The Sutherland Shire Market
Renting a property has become an increasingly vital part of the Australian housing landscape. With the real estate market constantly evolving, it’s essential to keep a close eye on rental growth trends to understand their impact on tenants and investors. In this article, we’ll delve into the recent findings from CoreLogic’s Quarterly Rental Review for Q2 2023, exploring national rental growth trends and how they may affect the Sutherland Shire Market.
What Is the National Rental Growth Trend?
The latest data from CoreLogic’s Quarterly Rental Review reveals that the rental growth rate across Australia has continued its upward trajectory, with a 2.5% increase in Q2 2023. This result shows a 30 basis points decline from the 2.8% increase observed in the three months to May. While this is a positive sign for property investors, it also means that tenants might face higher rental costs.
Interestingly, this quarter marked the first slowdown in rent growth since November last year. However, it’s crucial to note that the annual trend still shows a substantial 9.7% rise in national rents, although it’s slightly down from the record-breaking 10.2% surge in 2022.
What Are the Factors Contributing to the Rental Growth Slowdown?
Several factors have played a role in the recent slowdown of rental growth. One significant aspect is the ongoing surge in overseas migration. With international borders reopening, the influx of migrants has impacted rental demand.
Additionally, chronic undersupply in the property market has also contributed to the affordability challenge for rental properties. As demand continues to outstrip supply, it puts upward pressure on rental prices, making it harder for many tenants to find affordable homes. This situation may even lead to an increase in average household sizes as families look for cost-effective solutions to cope with rising rental expenses.
Are Unit Rents Catching Houses?
CoreLogic’s data shows that rental growth for units has outpaced that of houses. The unit market, known for being more affordable, has experienced stronger growth in comparison. Over the three months leading up to May, national unit rents experienced a new peak quarterly growth rate of 4.4%, which later eased to 3.6% in June.
Nevertheless, it’s important to note that the pace of growth has started to ease after reaching its peak. This could be attributed to the decreasing gap between median house and unit rents, indicating a preference for units among renters. As people seek cost-effective options without compromising on location and amenities, the demand for units has surged.
One major challenge contributing to the rental growth trend is the shortfall in rental listings and rising vacancy rates. Rental listings continue to lag significantly behind the previous five-year average, with a national deficit of approximately -32.4% or 47,500 rental listings recorded during the four weeks up to June 3rd.
As demand continues to outstrip supply, the number of available rental properties has decreased. This imbalance in supply and demand has resulted in higher rental prices, making it harder for tenants to find suitable homes within their budget. Moreover, rising vacancy rates can also lead to greater competition among tenants, potentially driving rents even higher.
How Can These Trends Affect the Sutherland Shire Market?
So how do these national rental growth trends might impact the Sutherland Shire Market? The Sutherland Shire, known for its beautiful coastal location and family-friendly atmosphere, has always been a sought-after area for renters and investors alike.
The CoreLogic data highlights some significant changes in the ranking of Australia’s rental capital cities. Adelaide has now emerged as the cheapest capital city for rentals, surpassing Melbourne in affordability. This shift could potentially attract more tenants to explore rental opportunities in Adelaide, especially for those looking for budget-friendly options. On the other hand, Hobart could also present itself as a strong contender for the most affordable rental capital in the country.
Furthermore, Sydney maintains its position as the most expensive capital for rentals. As a result, many tenants in the Sutherland Shire may face continued pressure on their rental budgets. However, it’s crucial to note that despite the challenges, the Sutherland Shire’s attractiveness remains the same. Its vibrant community, access to stunning beaches and excellent amenities continue to draw tenants and investors.
Wrapping Up
The rental growth trends in Australia have significant implications for both tenants and property investors. As the market continues to evolve, it’s crucial for tenants to be aware of the changing rental landscape and potential challenges in finding affordable homes. On the other hand, investors need to stay informed about shifting demand patterns and consider adapting their investment strategies accordingly.
In the Sutherland Shire Market, these national trends are likely to have an impact, but the area’s unique appeal is expected to remain strong. As a real estate property business in Australia, Hill & Viteri Property strives to keep a finger on the pulse of the rental market to serve our clients better. By understanding these rental growth trends and their effects, we can continue to provide you with meaningful assistance in your property journeys.
Remember, the property market is ever-changing, and staying informed is the key to making the right decisions, whether you’re a tenant looking for a new home or an investor seeking opportunities in the Sutherland Shire. Embracing these trends and navigating the rental battle with a clear understanding will undoubtedly make a difference in achieving your goals in the property market.
For more details about the property market in the Sutherland Shire and to explore available rental options, contact us today. Our team is here to assist you.