Australia’s cities post record rent gain amid inflation jitters
AUSTRALIA’S major cities posted the largest annual rent increase on record in May, fuelled by rapid population growth and a significant shortfall in property listings that highlight powerful inflation pressures in the economy.
Sydney and Perth led gains with rises of 13.2 per cent each, driving CoreLogic’s capital city index up 11.7 per cent, data from the property consultancy showed on Thursday (Jun 8). Canberra saw the weakest result as rents slid 1.9 per cent last month.
“The unit sector is under the greatest pressure, with rents increasing at a faster rate than houses due to their relative affordability,” said Kaytlin Ezzy, an economist at CoreLogic.
Soaring rents and likely further increases in coming months were among the reasons Reserve Bank of Australia (RBA) governor Philip Lowe resumed raising interest rates in May, after a brief pause in April, and backed that up again this week. The spike in rental housing costs has become a significant social issue too, as it calls into question Australians’ ability to secure affordable shelter.
The RBA this week lifted the cash rate to 4.1 per cent – the highest level since April 2012 – and is expected to hike further, underscoring the difficulty in slowing economic activity and tamping down inflation. Australia isn’t alone, with the Bank of Canada restarting its tightening campaign overnight as well.
Since the onset of Covid-19, Australian major city rents have risen 25.7 per cent, taking the median price to A$611 (S$549) per week, or roughly A$2,650 per month, the data showed.
The national vacancy rate hovered near a record-low 1.2 per cent in May with total rental listings 33.3 per cent below their long-term average, according to the data. Limited stock means tenants have less choice and weaker negotiating power. BLOOMBERG
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