Australian rents soared again in 2024, with the national median climbing 4.8% and some capitals seeing over 8% growth. But despite these increases, the heat is coming out of the market. Why? This article reveals how "affordability has become a significant drag," pushing renters to their limits and changing household dynamics.
Rents continued rising in 2024, with the national median rent climbing 4.8% over the year, according to CoreLogic. That included increases of 6.2% in the combined regions and 4.3% in the combined capital cities.
Among the capitals, Perth led the way with 8.1% growth, followed by Adelaide with 6.7% and Hobart with 6.0%.
But while rents increased further during 2024, a lot of heat disappeared from the market over the course of the year, with the pace of rental growth falling to its lowest level since March 2021.
CoreLogic economist Kaytlin Ezzy said affordability had become “a significant drag” on rental growth. Between the start of the pandemic in March 2020 and December 2024, the national median rent had increased 36.1%, equivalent to a rise of $171 per week or $8,884 per year, stretching renters’ budgets to the limit.
“The net result has potentially seen some prospective renters delay their decision to leave the family home, while others have looked to form larger share households as a way of distributing the additional rental burden, unwinding the previous shrinking in the average household size that was apparent through the early stages of covid,” she said.
This shift to larger households was reflected in increased demand for houses (which recorded a median annual rental increase of 5.0%) compared to units (4.2%).
Ms Ezzy said the rental market had also been affected by a change in the balance between supply and demand.
On the demand side, there was a slowdown in migration, which meant there were fewer people fighting for rental accommodation. On the supply side, there was an increase in investor activity, which meant more rental stock became available.
“Together these factors have supported an easing in vacancy rates over the year, from a low of 1.4% in November 2023 to 1.9% at the end of 2024,” Ms Ezzy said.
While the rental boom has eased for now, many property investors are still doing well, given that vacancy rates remain low and rents continue to rise in many parts of the country.
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