City rents soaring
There was the usual seasonal spike in rental vacancies in December - from 1.0 per cent 1.3 per cent nationally - as international students headed off for their summer break.
The general trend remains down, however, and this is expected to continue over the coming months as students return, and as the visa application backlog for new arrivals is cleared down.
Despite this, it does look as though rental markets have been easing in recent months in Canberra, Darwin, and in a number of regional markets.
The main rental pressures in 2023 are likely to be experienced in the capital cities, where new migrants will pour in.
Louis Christopher of SQM Research warned that historic seasonal trends suggest rental markets will become extremely tight in the early months of the new year.
Asking rents in the capital cities increased another +2.2 per cent over the month of December, to be a thumping +24.6 per cent higher over the year.
Source: SQM Research
Although rental yields are rising, it's pretty obvious that this market dynamic isn't healthy and that the lending settings are simply too tight for landlords at present, with the 300 basis points lending assessment buffer now far too wide.
The annual increase in asking rents in Sydney has powered to above +30 per cent, with the median asking rent for a house in Sydney rising to a record high of $900 per week.
While this may not be fully reflected in median rental price indices just yet, it's nevertheless the case that there is rampant competition for quality rental stock, and policy settings need to calm down a bit to allow the market to function more freely.
