Increase in rents continues to slow

Rental rate hikes nationwide are continuing to slow, but the Central Coast is still dragging the chain.

In the quarter to December 2024, rents in the region rose by 1.4 per cent, compared to a 0.4 per cent rise nationwide, the smallest Q4 change in rents since 2018.

In 2024 calendar year, average rents on the Central Coast rose by 10 per cent  from $623 per week to $686.

Houses rose by 10.6 per cent from $650 to $719 and units rose by 7.7 per cent from $535 to $566.

This was well above the national rental growth of 4.8 per cent over the year.

The result marked the smallest annual rental increase nationwide since the 12 months to March 2021 when rents rose 3.6 per cent.

CoreLogic economist, Kaytlin Ezzy, says this suggests that while still high relative to the pre-COVID decade average (two per cent), the national rental market has well and truly passed the peak of the recent rental boom.

“Rental affordability continues to be a significant drag on rental growth,” Ezzy said.

She said that since the onset of COVID, rents had increased by 36.1 per cent nationally, equivalent to a rise of $171 per week, or $8,884 per year at the median level.

As of September 2024, assuming a median household income, renters were spending approximately 33 per cent of annual pre-tax income to service the median rent, the highest portion since CoreLogic started tracking rental affordability in 2006.

“The net result has potentially seen some prospective renters delay their decision to leave the family home, while others have looked to form larger share households as a way of distributing the additional rental burden, unwinding the previous shrinking in the average household size that was apparent through the early stages of COVID,” Ezzy said.

She said the move to larger households was also apparent across property types, with houses recording both stronger quarterly and annual rent rises compared to the unit sector.

Ezzy said changes in supply and demand were also important factors contributing to easing rental growth.

“On the demand side, the easing in net overseas migration was also a factor contributing to softer rental demand, with net overseas migration levels expected to normalise around pre-COVID decade averages by the 26/27 financial year,” she said.

“While on the supply side, the annual value of new investor lending increased by 26.3 per cent over the year to September 2024, suggesting a potential net increase in rental stock.

“Together these factors have supported an easing in vacancy rates over the year.”