Even the most enthusiastic property investor may be wondering when the growth in rental income will taper off after an incredible post-Covid period of income increases.
Over the past five years, accelerating rental prices have forced many younger Australians back to their parental homes, and increased their challenge to save for a first-home deposit.
It’s also placed many families who chose to rent under additional financial pressure at a time when the phrase “cost of living” is barely mentioned without the word “crisis” being tagged onto the end.
Investors have faced their own challenges. Victorian legislation related to land tax, and rules to protect tenant rights in various states, have forced many to leave the sector because of increasing costs.
Yet, rents continue to rise.
Since March 2020, they’ve climbed 38.4%. That’s the equivalent of $182 per week or $9,442 annually.
Industry researcher Cotality (formerly CoreLogic) has now reported that national rents have risen 1.7% in the first quarter of this year.
Its March quarter data suggests a rebound from the 0.4% rental income growth recorded for the 12 weeks to the end of December.
However, it’s the slowest March quarter increase since 2019, and it’s down 1% on the corresponding period last year.
The rolling 12-month growth is now 3.8%, compared with 8.4% last year.
Cotality said advertised rental listings remain below average, suggesting another squeeze might be on the way.
Almost 100,000 properties were listed in the four weeks to April 6. That’s -22.1% below the historic norm for this time of year.
Cotality said: “Vacancy rates tightened to 1.6% in March, down from 2% in December and 1% above the record low seen in March 2024.”
Rents for apartments increased 2.3% and house rents were up 1.4%.
“The renewed growth in unit rents is likely linked to the seasonal lift in demand from international students who typically favour higher density housing,” Cotality said.
Across the capitals, Hobart led the charge with a 2.3% increase in dwelling rents. Perth (2.2%), Brisbane (1.9%) and Adelaide (1.8%) also posted solid gains.
Sydney and Melbourne recorded declines before last Christmas but have bounced back with rental income growth of 1.4% and 0.8% respectively.
On an annual basis, Perth continues to lead with rents up 6.3%, followed by Adelaide (5.5%) and Hobart (4.6%). Canberra recorded the smallest increase at 1.6%.
Hobart remains the most affordable state capital for rents.
Rental income growth remains strong, offering solid returns for property investors despite a slight slowdown. Low vacancy rates and tight supply continue to support the market. With rents still rising, the outlook remains promising for those holding quality investment properties.