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Rent increases more common and larger: ABS

  • April 26, 2023
  • by Property Australia
Rents have increased for almost three-quarters of properties

New data from the Australian Bureau of Statistics (ABS) has found rent increases have become larger and more common over the past five years for most properties in capital cities. 

The ABS said this was regardless of whether properties have a new tenant or not, but those with new tenants are more pronounced, at roughly 10 per cent higher.

In the last year, rent prices have increased for nearly 75 per cent of properties, a significant jump from the pre-pandemic rate of around 25 per cent.

Notably, rental prices for properties with new tenants are more prone to fluctuations than those with existing occupants.

Analysis shows that in the latter half of 2020, fresh lessees were typically able to secure rental rates that were either equivalent to or lower than the previous year’s rates for a given property.

Starting in the middle of 2021, a significant proportion of new renters have been facing steeper rental fees compared to the previous year’s charges for the same property.

This trend has become more pronounced the ABS said, with the percentage of such cases surging to 94 per cent in February 2023, in contrast to the 71 per cent of rental properties occupied by existing tenants where the rent has remained steady.

The ABS also found rents have increases at a faster pace for more expensive properties than for less expensive properties over the last year. 

The ABS said rents paid by new tenants provide a leading indication of price developments. This is compared to previously using advertised rents, which the ABS said the actual rent amount agreed between tenants and landlords might differ.

Between February 2022 and February 2023, the real rental prices paid by new tenants surged by 14 per cent, which is nine per cent higher than the rise observed in the monthly CPI rent index. The latter gauge encompasses all rental charges, not exclusively those paid by fresh tenants.

Since the pandemic’s emergence in 2020, newly-arrived renters have faced a sharp 24 per cent hike in rental payments, while the CoreLogic rent series – a metric that gauges advertised rental rates – has seen a comparable 22 per cent uptick.

The ABS said rents for apartments with new tenants have been more volatile than for houses and townhouses over the past couple of years.

Rents for apartments fell sharply during the pandemic and remained under pre-pandemic levels until early 2022, while rent increases for hoses have been positive the entire time.

In the period leading up to February 2023, apartments rented out to new tenants experienced a surge in rent prices by 24 per cent, surpassing the overall index increase of 14 per cent. In contrast, newly-occupied houses and townhouses saw a comparatively moderate 10 per cent increase in rental costs over the same period.