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Tuesday, 20 December 2022

Rental demand shifts back to cities

City rents rising fast

Rental vacancies remained flat at 1 per cent in November at the national level, according to SQM Research.

In Canberra, rental vacancies are suddenly on the rise, but most other capitals have very tight rental markets, particularly Perth, Adelaide, Hobart, and Brisbane.

Asking rents increased by another 1.5 per cent over the month.

Capital city rental markets have now seen asking rents rise by more than 25 per cent over the past year, led by a 29 per cent increase in Sydney, and similarly outsized increases in Melbourne and Brisbane.

Asking rents have slowed in much of regional Australia now, on the other hand. 

Source: SQM Research

SQM sees rental demand shifting away from some regional areas such as the Blue Mountains, and "NSW North Coast, Gold Coast North, Ipswich, North Queensland, Gippsland, and a number of outer ACT localities."

The demand is shifting back to the cities.

CBD rental vacancy rates are now at or below historical averages in Sydney (3.2 per cent), Melbourne 2.5 per cent), and Brisbane (1.4 per cent).

With restrictive moves on interest rates on borrowing capacity, rental markets in the capital cities look set to become extremely tight next year, with immigration rising, a reversal of demographic flows from the regions back to the capitals, and ongoing lending assessment buffers against landlords.

You can read the SQM media release here.