CoreLogic’s Rental Market Review for the December 2020 quarter released today has reiterated the diverse rental conditions across Australia over the year, with regional markets outperforming capital cities and unit markets recording weak conditions across the largest capital cities.
December 2020 saw Australia’s dwelling market record the largest monthly increase in rental rates since 2010, up 0.6% over the month. The 10 year record can be attributed to growth across the house market which saw a 0.9% rise in rental rates over the month, more than offsetting a -0.1% fall in unit rents.
Across the broad regions, regional markets were the standout performer with both house and unit rents up 1.1% in December, taking house rents 2.9% higher over the final quarter of 2020 and unit rents 2.6% higher.
CoreLogic’s research director Tim Lawless, says “COVID-19 not only disrupted how we live, but also reshaped housing demand as accommodation preferences swung towards lower density options.
“Higher density housing markets have seen less demand during the pandemic; a trend that has been amplified by stalled overseas migration and remote working opportunities luring residents further afield. Whether this trend has some longevity is yet to be seen, but international borders are likely to remain closed for some time yet, and for many, remote working conditions have proved to be productive.”
Meanwhile the combined capital cities saw further divergence in house and unit rents; a theme seen throughout 2020 as inner city unit markets feel the impact of reduced demand amidst the pandemic environment.
Capital city house rents increased by 0.7% in December to be 0.8% higher in Q4, while unit rental rates across the capital cities fell -0.3% over the month to be down -1.6% over the December quarter.
Despite the diverse performance over the year, national rents rose by 1.9% annually in 2020, which was the largest annual increase across the dwelling market since mid-2018.
Key highlights – December Quarter
- National rental rates rose by 0.6% over the month of December, taking national rents 1.9% higher over 2020 calendar year; the largest annual increase since 2018.
- Rental conditions in 2020 were diverse with regional markets outperforming capital cities. Combined capital city dwelling rents rise 0.8% quarterly to be up 0.7% over the year, while regional markets were up 2.9% over the final quarter of 2020 to be 5.3% higher annually.
- Capital city houses and units diverge through 2020, with house rents up 3.3% annually against a -4.6% decline in unit rents.
- Melbourne and Sydney inner city unit markets recorded the largest falls, down -7.6% and -5.7% over the 12months to December 2020.
- Houses in Canberra overtake Sydney as the most expensive capital city to rent in 2020 with a median rental value of $624p/w.
- Perth and Darwin were the best performing capital city rental markets of 2020, with dwelling rents up 9.7% and 8.8% respectively.
- National gross rental yields were recorded at 3.71%, down from 3.81% a year earlier as dwelling values outperform rental growth in 2020.
- Hobart records the largest falls in gross yields for houses, down to 4.47% in December 2020 from 5.03% in December 2019.