After many months of rising rent values, many Australians are asking: will rent go down in 2024?
When we first published this article on January 25th, 2024, signs were pointing to a potential rent decrease due to factors like rising housing supply, slowing migration, and affordability constraints.
However, here we are almost midway through 2024, and it doesn’t look like rent will go down after all based on the latest data.
What You Will Learn?
- Understand the factors influencing the rental market in 2024.
- Gain insights from property experts on why rent prices will change this year.
- Prepare for potential changes in the housing market landscape.
Key Housing Market Trends Impacting Rental Prices
Rolling annual change in regional Australia house and unit rents
According to CoreLogic data, national housing values fell 8.4% over the past year, the largest annual decline since 2008. However, the pace of declines has moderated recently.
Most economists expect the housing downturn to bottom out by late 2024 as interest rates stabilise and pent-up demand from prospective buyers returns.
HOWEVER…
While housing prices have cooled, most rental markets remain extremely tight across the capital cities.
SQM Research reports the national vacancy rate at just 1.3% in April 2024, with Sydney and Melbourne among the most expensive rental markets.
Rental Affordability Challenges for Renting Households
The latest Rental Affordability Index shows national rents surged 9.1% higher over the past year, far outpacing income growth of just 3.7%. This softer income growth slows renting households’ ability to keep up with rising rents.
PropTrack data indicates national house rents averaged $580 per week in Q1 2024, up 7.8% year-over-year. Unit rents grew 9.4% to $460 per week on average across the combined capital cities.
Notable annual rent increases were observed in various cities, with Perth experiencing the highest at 13.6%, and other cities like Melbourne and Adelaide seeing increases around 9%.
| Region | Median weekly rent | Monthly change in rents | Quarterly change in rents | Annual change in rents |
| Sydney | $770 | 1.0% | 3.0% | 9.0% |
| Melbourne | $589 | 0.8% | 2.8% | 9.6% |
| Brisbane | $649 | 0.8% | 2.1% | 8.5% |
| Adelaide | $589 | 0.6% | 2.4% | 9.1% |
| Perth | $669 | 1.2% | 3.9% | 13.6% |
| Hobart | $547 | 0.2% | 2.5% | -0.2% |
| Darwin | $617 | -0.3% | -0.1% | 3.5% |
| Canberra | $674 | 0.6% | 1.9% | 1.8% |
| Combined capitals | $659 | 0.9% | 2.9% | 9.4% |
| Combined regionals | $540 | 0.7% | 2.5% | 6.4% |
| National | $627 | 0.8% | 2.8% | 8.5% |
Interest Rates and Mortgage Stress Increase Rental Demand
The Reserve Bank’s cumulative 4% cash rate increase since May 2022 has added over $1,000 per month to typical investment loan payments. This has severely dented housing affordability for property investors.
ANUpoll found 35% of mortgage holders are now in housing stress, up from just 14% in 2021. Rising rents and increased investment purchases are forcing more households to remain renters.
Further Reading: Learn how interest rates affect rental prices in Soho’s guide.
Rental Supply Constraints Amid Population Growth
Strong population growth of 1.1 million people in 2023 has outpaced new rental supply, according to the ABS.
Housing construction slowed 25% in 2024 due to higher costs and interest rates, with the HIA estimating just 165,000 new homes built.
The federal government’s Housing Supply and Affordability Council forecasts the national rental shortage will widen to 600,000 properties by 2026 without major reforms to boost affordable housing.
Outlook: Further Rent Value Growth Expected in 2024
Given the supply shortages, high immigration, and rising mortgage stress, most experts anticipate national rent values will continue rising 6-8% over 2024.
Corelogic is seeing a tighter rental market across Australia, with strong demand in both metro and regional areas, and limited reprieve expected in the near term.
This situation is likely to persist until there’s a moderation in net overseas migration or an increase in housing supply.
The rental crisis is being driven by cyclical factors like lower income growth slowing renting households’ ability to keep up with rising rents and increased investment purchases adding to housing demand. Protecting lower income households from further rent increases will require boosting rental supply.
Tips on Renting in a Tight Rental Market
Be Prepared to Act Quickly
In a competitive rental market, desirable properties get snapped up fast. Have all your documentation (pay stubs, references, etc.) ready to go and be prepared to submit an application quickly when you find a place you like.
You can also check out Soho’s article on How to Get a Rental Property in a Hot Market for more tips.
Stay Ahead of the Curve
Soho’s Property Match feature matches you while you sleep. Set up your match profile on Soho, enter your interested areas, and we’ll use AI to send you the best properties for you based on your needs.
Offer Above Asking Rent
While never fun to pay more, offering a slightly higher monthly rent than listed can make your application stand out to landlords looking to maximsze income.
Leverage Your Rental Resume
In your renter resume, highlight things like a great credit score, steady employment, longevity at previous rentals, and strong references to show you’re a reliable tenant.
More on rent going down in 2024
How does the housing market impact rents?
The housing market can have a direct impact on rental prices. If there is a decrease in housing demand, rents may also go down.
What role do interest rates play in rental prices?
Interest rates can influence the rental market. Lower interest rates may encourage more people to enter the market as investors, leading to an increase in rental supply and potentially lower prices.
Are rental increases expected to continue?
Yes, according to most experts, national rent values are projected to continue rising 6-8% over the course of 2024, with Sydney and Melbourne potentially seeing rent value growth of 8-10%.
What impact could the Reserve Bank of Australia have on rents?
The Reserve Bank’s cumulative 4% increase in the cash rate since May 2022 has significantly raised monthly mortgage payments for property investors. This has dented housing affordability and forced more households to remain renters, putting upward pressure on rental demand and prices.
Will there be more affordable rental markets in 2024?
It is unlikely there will be many more affordable rental markets in 2024. The article states that 57% of renters are considering moving to find cheaper accommodation as budgets are squeezed by higher rents. However, with national rental shortages expected to widen, affordable options may remain limited.
Which areas are considered expensive rental markets?
Sydney and Melbourne are highlighted as among the most expensive rental markets in the country, with SQM Research projecting rent value growth of 8-10% in these cities during 2024.
Will more people exit the rental market in 2024?
No, many sources like Corelogic express the opposite – that more households will be forced to remain renters in 2024 due to rising mortgage stress from higher interest rates and increased investment purchases in the housing market.