Australia home rents surge as vacancy sinks to record low
On an annual basis, rents have jumped 4.3%
[SYDNEY] Australia’s home rental market tightened further in the third quarter, with the national vacancy rate sinking to a record low, in a setback for inflation prospects and hopes of near-term rate cuts.
The ongoing scarcity of rental vacancies, coupled with continued strength in demand, pushed the national vacancy rate to a record low of 1.47 per cent, less than half the 3.3 per cent average for the decade prior to the Covid-19 pandemic, data released by Cotality, formerly CoreLogic, on Wednesday (Oct 8) showed.
The Cotality Rental Value Index, which measures national dwelling rents, climbed 1.4 per cent in the three months to the end of September, its largest quarterly gain since mid-2024. On an annual basis, rents jumped 4.3 per cent. The most expensive market was Sydney with a median rent of A$807 (S$687) per week.
The data came as Australia’s home prices posted their strongest monthly gain in nearly two years last month, further worsening a once-in-a-generation housing affordability crisis, which has been spurred on by an acute supply shortfall and strong demand.
The upturn in housing costs threatens to complicate the inflation and cash rate outlook, given rents are a key component of Australia’s consumer price index basket, said Cotality economist Kaytlin Ezzy.
“Along with some renewed upward pressure from the cost of new dwellings, this renewed momentum in rents may lead to inflation exceeding RBA forecasts,” Ezzy said. “Which could keep the cash rate elevated for longer.”
Australia’s central bank has lowered the cash rate by 75 basis points since the start of the year, to 3.6 per cent. Reserve Bank of Australia governor Michele Bullock last week signalled patience on further rate cuts, pointing to a stronger-than-expected pickup in household consumption, driven by real income growth and a tight labour market.
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