Source: CoreLogic
The Australian rental market is undergoing a positive transition after a period of rapid growth. While rents rose by 4.8% over 2024, the growth has moderated, signaling a more balanced market. In the December quarter, rents increased by just 0.4%, the smallest rise since 2018, reflecting a return to more sustainable growth after the pandemic-driven boom.
Despite the slowdown, rental affordability remains a key focus. While rents have increased by 36.1% since COVID-19, many renters are finding creative ways to manage costs, such as opting for shared households. This shift could lead to a more stable rental environment, as it helps to balance demand and ease pressure on renters.
Increased investor participation has brought more rental stock into the market, helping to ease vacancy rates slightly, from 1.4% in late 2023 to 1.9% by the end of 2024. This additional supply is a positive sign for renters and investors alike, offering more options and helping stabilize rent growth.
While capital cities like Sydney and Melbourne experienced more moderate growth, regional areas have seen strong increases, with rents up 6.2% over the year. This growth highlights the ongoing demand for rental properties in diverse locations, offering opportunities for both renters and investors across the country.
National rental yields remained stable at 3.7%, with some cities experiencing slight increases. Melbourne, for example, saw a rise in rental yields, while other cities like Perth are benefiting from a healthy balance between property values and rental returns. These stable yields present attractive opportunities for investors looking for steady returns in a more balanced market.
As the rental market cools, it is shifting toward a more sustainable and balanced environment. Increased supply, a slowdown in demand pressures, and positive growth in regional areas offer a brighter outlook for 2025. This shift creates opportunities for renters and investors to find stability and value in a changing market.
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