Rent in Australia's big cities has skyrocketed

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Central apartment rents in Australia's capital city soar! expected to rise further

Surging demand and dwindling rental supply have pushed median rents up more than 22 per cent in some inner-city Melbourne suburbs over the past 12 months, with more gains expected as vacancy rates tighten, CoreLogic figures show.

The median weekly apartment rent in inner Melbourne has risen the most over the year, with Docklands surging 22.2 per cent. Rents rose 21.6 per cent in South Bank, 20.5 per cent in West Melbourne and 17.7 per cent in metropolitan Melbourne.

In Sydney over the same period, median apartment rents rose 16.9 per cent in Pyrmont, 14.6 per cent in Ultimo and 14.3 per cent in Haymarket.

CoreLogic head of research Tim Lawless said many inner-city rental apartment markets had recovered from the trough of the pandemic.

“These inner city areas are now rebounding strongly against the backdrop of rising demand and rapidly tightening vacancy rates. Demand for rental accommodation in inner city centres is now being driven, chiefly by high rents and rental affordability. More renters are considering higher-density housing in the inner city.

“The recent opening of borders with overseas students and tourists, as well as permanent immigrants, has increased rental demand, thereby expanding new demand. Additionally, as workers return to offices and Covid-related restrictions are eased, inner-city areas have become more active, and the city’s Central areas may become more popular."

The inner-city areas of Melbourne and Sydney have been the hardest hit during the pandemic due to border closures and migration away from the city.

Rents in some inner Melbourne suburbs have fallen by more than 20 per cent from peak to trough, Lawless said.

Prices in Bardon and Ascot in inner Brisbane rose by more than 19 per cent, while Coogee in Sydney's eastern suburbs rose by 13.9 per cent.

While some of Sydney's more expensive suburbs saw house prices fall in the three months to March, rents in suburbs such as Randwick rose 7.9 per cent, the biggest quarterly rise in the capital city for houses.

Clovelly was up 6.6 per cent, Somerton in Adelaide's south was up 7.4 per cent and homes in Yeerongpilly, south of Brisbane, saw similar gains.

The national vacancy rate fell to a record low of 1 per cent in March, Domain figures show.

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The 10 most underrated areas for single-family homes in Australia!

Toowoomba in Darling Downs in Queensland, Griffith in Riverina in NSW and Bendigo in Victoria have lower prices, attractive rental yields and further price increases, according to the latest PRD affordable housing report.

The property agency's latest Top 10 Affordable Regions report for 2022 also included Whitsunday, Mackay, Wagga Wagga and Upper Hunter, Northern Grampians, Wodonga and Tasmania's Central Highlands on the list of suburbs with the best opportunities for house price growth.

These are areas where the median house price is below the state average loan-to-value (not price), yields at or above capital city loan-to-value, and will receive business and infrastructure investment that will drive house prices over the next few years go higher.

"The Australian dream of owning a property remains alive, with some regions leading the way in affordability and liveability," the report said.

With borrowing costs rising and prices in Sydney and Melbourne from rising to falling, suburban real estate, or the less developed capital market, is on the rise and could get a further boost from last week's federal budget.

The latest figures from CoreLogic show that in the three months to March, the total value of Australia's suburban dwellings rose by 5.1 per cent, more than triple the 1.5 per cent rise in capital cities over the same period.

The median house price in all areas in the report was below $550,000, half of Melbourne's median in the December quarter and a third of Sydney's. The report includes areas where home prices are below the average state loan plus 20 per cent deposit.

Griffith's median house price rose 16.3 per cent year-on-year to $450,000 in the year to December, with $375.8 million in planned investment in the area.

In Toowoomba, where the median house price rose 9.2 per cent year-on-year to $420,500, there will be $1.6 billion worth of investment. Meanwhile, Bendigo's housing market is up almost 23 per cent year-on-year, with a median price of $510,000 and planned development spending of $1.2 billion.

In Tasmania's Central Highlands, which includes the Bothwell and Hamilton regions, the median price rose 54 per cent to $250,000, with the region expected to receive further investment worth $96 million.

In Queensland, the average state loan was $501,620 in the December quarter, compared with $763,990 in NSW, $616,513 in Victoria and $431,294 in Tasmania.

In addition to attractive production and future-planned infrastructure, unemployment in the local government area is at or below the state average, suggesting that the level of economic activity will benefit the area as well.

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Melbourne's housing market has begun to show a downturn! Home prices in these suburbs have fallen the most!

House prices in some of Melbourne's most expensive inner-city suburbs fell 6.4 per cent in the first quarter, new figures show, suggesting prices have started to fall after a nearly two-year Covid-19 pandemic property boom.

The downturn has yet to affect the outer suburbs, where house prices remained stable in the first three months of the year, CoreLogic data found.

CoreLogic research director Tim Lawless said the value of properties in the top 25 per cent of the market fell by 0.4 per cent, while the value of properties in the bottom 25 per cent rose slightly by 0.7 per cent.

A total of 295 neighborhoods across the city saw home prices fall after two consecutive years of price increases, while eight suburbs remained unchanged.

"The data is surprising that we're seeing so many suburbs move into negative territory, another sign that the market is entering the early stages of a downturn."

Cremorne, near Richmond in the inner east, led the decline, with the median house price falling 6.4 per cent to $1,446,443. Unit prices in the region also fell 3 per cent to $751,859.

The top three decliners included the affluent suburb of South Yarra, where the median house price fell 4.8 per cent to $2,276,063, while units in Hampton East fell 4.5 per cent to $794,023.

In contrast, in suburbs farther from the city, such as Mitcham, Reservoir and Boronia, house prices have remained unchanged since late last year.

Home prices have fallen but are still above pre-coronavirus levels, meaning new homeowners are not in negative equity.

With more homes listed for sale, homebuyers have more choice and less urgency, a stark contrast to last year's rise in home prices when listings were sparse and buyers enjoyed ultra-low prices Mortgage rates, government incentives and a strong desire to pursue more space during Melbourne's multiple lockdowns.

High-end home prices, while softening, are still well above their pre-pandemic levels.

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Canberra house prices edge up in March

House prices in Canberra edged up in March, but property data analysts remain adamant the market is losing steam.

CoreLogic's recently released monthly house price index showed that in March, the median house price in Canberra was $1,055,812, an increase of 0.8%; the median unit price was $609,314, an increase of 1.5%.

Residential values across Canberra, including apartments and houses, rose 1 per cent to $932,704.

The national index of dwelling values rose 0.7 per cent in March, driven by rising house prices in Brisbane, Adelaide, Perth, Canberra and regional areas; however, dwelling values in Sydney and Melbourne both fell during the month.

National dwelling values rose 2.4 per cent in the first quarter of this year, adding about $17,000 to the value of the average Australian dwelling.

But in the first quarter of last year, Australian dwelling values more than doubled their current pace, up 5.8 per cent; in the year to May, they were up 7 per cent.

CoreLogic research director Tim Lawless said it was further evidence that housing growth was losing steam.

"Last year or earlier this year, trend growth rates peaked in almost every capital city and other major sub-regions," he said.

With last year's strong rise in house prices no longer factored into the annual calculation, the annual growth trend is set to decline sharply in the coming months.