Housing crisis worsens in largest capital cities, but there is respite in regional areas
- Posted By Ndl 1 Realty
Rent prices have persistently increased due to high demand and limited supply, intensifying competition for available rental properties. Nonetheless, tenants residing in smaller capital cities and regional areas are starting to witness signs of improved conditions.
PropTrack's latest Market Insight reveals a significant decline in new rental listings across Australia, with a staggering 18.9% drop from March to April. This decline represents the most substantial monthly decrease observed since 2017.
When compared to the onset of the pandemic, the rental market is facing even greater challenges, with a notable 36.4% reduction in listed rentals and nearly 40% fewer total rentals available. These statistics underscore the immense difficulty experienced in the current rental market.
Over the past year, rental market conditions have followed diverging trends, with worsening conditions observed in our largest capital cities while renters in smaller capitals and regional areas enjoy increased choices compared to the previous year.
Notably, cities like Sydney, Melbourne, and Perth have experienced a decline in rental listings, with both new and total listings lower than those recorded in March 2023, March 2022, and March 2020. These three cities were the only major capital areas where total rental listings did not witness an annual increase.
Conversely, cities such as Brisbane, Adelaide, and Hobart have seen positive developments in their rental markets. New rental listings in these cities have respectively risen by 7.9%, 4%, and 37.7% over the past year. Moreover, the total listings in these areas have increased by 5.4%, 3.6%, and 66.1% respectively, indicating a notable growth in rental options for tenants.
Over the past year, rental market conditions have followed diverging trends, with worsening conditions observed in our largest capital cities while renters in smaller capitals and regional areas enjoy increased choices compared to the previous year.
Notably, cities like Sydney, Melbourne, and Perth have experienced a decline in rental listings, with both new and total listings lower than those recorded in March 2023, March 2022, and March 2020. These three cities were the only major capital areas where total rental listings did not witness an annual increase.
Conversely, cities such as Brisbane, Adelaide, and Hobart have seen positive developments in their rental markets. New rental listings in these cities have respectively risen by 7.9%, 4%, and 37.7% over the past year. Moreover, the total listings in these areas have increased by 5.4%, 3.6%, and 66.1% respectively, indicating a notable growth in rental options for tenants.
We are also observing a similar divergence between the demand for housing in our larger capital cities and regional areas.
When comparing the change in the ratio of potential renters per available listing between capital cities and regional areas, there has been a notable 12% increase in cities, while regional areas have witnessed a decline of 21% year on year.
The strong demand observed in capital cities might indicate a shift in people's preferences regarding their desired place of residence. During the height of the pandemic, when remote work became the norm, many individuals relocated to regional areas and smaller cities that offered lower prices and more spacious living environments.
However, with the return to office or hybrid work arrangements, resumption of in-person university classes, and the revival of central business districts (CBDs), the trend of migration from cities to regions appears to be diminishing.
The resurgence of migration, especially with the return of international students, is an influential factor contributing to the heightened demand for rental properties in capital cities. Given that universities are predominantly situated in inner city areas, the majority of students seek accommodation in close proximity to their educational institutions.
In the near to medium term, rental markets are expected to remain challenging, with limited supply and sustained high demand, particularly in capital cities. Although there has been a slight improvement in conditions for renters in regional and smaller cities, the number of available listings remains below pre-pandemic levels. Without significant increases in rental supply, tenants will continue to face escalating rents and fierce competition for housing.