The rising cost of rentals in Australia is unlikely to ease significantly in the first few months of 2023, despite the market cooling slightly.
Renters endured the fastest growth on record last year, with rock-bottom vacancy rates driving national rents up by 10.2 per cent, a new Corelogic report reveals.
WATCH THE VIDEO ABOVE: Expert says there’s no end in sight for Australia’s rental crisis.
For more Real Estate related news and videos check out Real Estate >>
While December quarter rental data shows the pace of growth slowing to 2 per cent in the final three months of 2022, experts warn renters may not feel the relief of the cooling market for some time.
A Domain rental report for the December quarter also revealed 2022 was a record-breaking year for the rental market.
“Nationally, asking rents are at historic highs across all cities — apart from Darwin and units in Perth,” Domain research and economics chief Dr Nicola Powell said.
“Rents are rising at the fastest annual pace ever seen across the combined capitals and the number of vacant rental properties is at an all-time low for the month of December.”
House and unit rents remain at record highs across all cities, with the largest rent increases in Brisbane and Adelaide — up roughly 13 per cent.
This was closely followed by Sydney and Perth, which were up about 11 per cent.
CoreLogic head of research and report author Eliza Owen said, although December marked the second consecutive quarter that the pace of growth slowed, rental prices still remain high.
“While a slowdown in the pace of rent rises could be a sign that the rental market is starting to shift, it’s not great news for tenants just yet,” she said.
“Rents are still rising in most capital cities and regional areas with vacancy rates low.”
There was also a small lift in the rental vacancy rate to 1.17 per cent in December, up from a low of 1.05 per cent in November.
Owen explained this could be due to several factors.
“It is not entirely clear whether the rental market will continue inching toward a turning point or if this is a temporary, seasonal reprieve due to higher new listings through December,” she said.
“New advertised rent listings saw a seasonal peak in the four weeks to December 11.
“Through this period, 50,867 new advertised rental listings were counted by CoreLogic, which is the highest volume observed since mid-February — another seasonal high point.
“However, it’s important to recognise, despite the increase in rental listings, the figures remain 13.8 per cent lower than the previous five-year average for this time of year.”
With another seasonal uplift in advertised rents expected in the next few weeks, rental growth could ease further.
Interest rate predictions for 2023
Meanwhile, the Reserve Bank of Australia is forecast to lift the cash rate periodically over the next two years, Rate City suggests.
Experts from the big banks have also forecast, for the average owner-occupier paying a variable rate, home loan rates could reach 6.61 per cent by the first half of 2023.
In December, the RBA announced it would increase the cash rate for an eighth consecutive month.
Reserve Bank Governor Philip Lowe said the interest rate would rise by 0.25 per cent to 3.1 per cent – the highest level since 2012.
The big four banks have forecast another 25 basis points increase at the next RBA meeting in February.
The big four banks’ cash rate predictions for the year are:
- CBA: 3.35 per cent by February 2023, then dropping to 2.85 per cent by November 2023
- Westpac: 3.85 per cent by May 2023, then dropping to 2.85 per cent by November 2024
- NAB: 3.60 per cent by March 2023, remaining steady into 2024
- ANZ: 3.85 per cent by May 2023, then dropping to 3.60 per cent by November 2024
– With AAP