Median rents in Australia rose 2.5% in the three months to June 2023, down from a 2.8% increase in May, according to CoreLogic's rental index.
This is the first time since November '22 that the pace of rental growth had slowed, but it continues to be well above average levels.
After median rent in Melbourne rose 3.9% to $551 per week, Adelaide is now the most affordable capital to rent in with a median price of $549.
Adelaide offers the cheapest units for rent with a median rate of $455, while Hobart offers the most affordable houses at $565.
At a median rent of $733, Sydney continues to be the most expensive rental market in Australia, and recorded 3.2% quarterly growth.
Canberra and Hobart (both down 1%) saw a quarterly drop in rents, but all other capitals saw rates continue to increase.
All capitals except Canberra have seen rents climb over the past 12 months, with Perth (up 13.4%), Sydney (up 12.9%), Melbourne (up 12.6%) and Brisbane (up 10.3%) all recording double digit annual growth.
| Median rent (June '23) | Quarterly growth | Annual growth | |
| Sydney | $733 | 3.2% | 12.9% |
| Melbourne | $551 | 3.9% | 12.6% |
| Brisbane | $614 | 2.1% | 10.3% |
| Adelaide | $549 | 2.5% | 9.6% |
| Perth | $599 | 3.4% | 13.4% |
| Hobart | $552 | -1.0% | 1.3% |
| Darwin | $600 | 0.7% | 3.5% |
| Canberra | $669 | -1.0% | -1.0% |
Units catching houses?
According to CoreLogic unit prices to be the primary driver of rental rates, up 3.6% in the June quarter compared to 2% for houses.
Domain's quarterly rental report also found unit rents are accelerating faster than houses, which Domain's Chief of Research and Economics Dr Nicola Powell says reflects how much demand there is for rentals in Australia at the moment.
"The acceleration of unit rents across the combined capitals has seen the price gap between property types narrowing. This is a reflection of the heat in the rental market right now, with affordability constraints driving greater demand to units and overseas migration bolstering demand in inner city locations often dominated by units” Dr Powell said.
Rental conditions continue to be incredibly tight, with record net overseas migration combining with housing shortages, and increasing mortgage repayments passed on to renters.
The rate of rental growth slightly decelerated in June, according to both CoreLogic and Domain.
There was a marked uptick in vacancy rates, which have persistently sat at near record lows across Australia.
This might be down to an increase in shared housing, more Aussies getting a roommate.
Alternatively, more Aussies might be deciding against more in demand areas and instead opting for more affordable options elsewhere, spreading rental demand.
However, in his appearance on the Savings Tip Jar podcast, PropTrack director of economic research Cameron Kusher warned excess demand is an issue unlikely to go anywhere.
"Ultimately, the way to fix what's happening in the rental market at the moment is to reduce demand. And you either reduce demand by having fewer people come into the country; no one seems to willing to let that be the case," Mr Kusher said.
"Or you reduce demand by getting more people to buy their first home and stop renting. And it's very hard to make that leap from renting to owning at the moment because in most instances, paying off a mortgage is more expensive than it is to rent despite the rental growth we've had."
Dr Powell feels unless there's a big jump in supply, Australia's affordable housing crisis is likely to get worse.
"With a number of factors at play, there needs to be a seismic shift in supply to address the challenges being faced. In fact, our research shows that more than double the rental listings are needed today to create a balanced rental market," she said.
Cities such as Brisbane have several projects to unlock significant supply, but it is still not enough to keep up with demand.
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