Rents in Australian cities rising as demand outstrips supply

by Ray Clancy on August 26, 2011

in Property in Australia

Rental costs increasing Down Under

People moving to work and live in Australia face paying more for rental properties as demand is high, particularly in inner city suburbs, according to real estate groups.

Low vacancy rates, improving employment, the end of the first homebuyers’ grant and last year’s string of rate increases have contributing to the rises in rents.

Sydney has seen the steepest increase in rents with the inner city suburbs of Glebe, Randwick, and Potts Point all recording rent rises of at least 11% compared with this time last year.

The latest quarterly report from Run Property, Australia’s largest specialist residential property management company, shows that the average weekly rent across the city is now $534. The highest performing suburb in Australia is Sydney’s Neutral Bay, where rents for new tenancies jumped by more than 12% compared with this time last year.

‘Many tenants are staying put’ because research continues to show that rent increases are greatest when tenants move out and the property is advertised for lease,’ said Rob Farmer, chief executive officer of Run Property.

In Melbourne, the suburbs of Armadale, Glen Iris and Kew have seen rents increase by at least 10%, followed by Fitzroy, Essendon, Fairfield, Brunswick and Moonee Ponds, which recorded rent rises of 9% or more.

In Brisbane, Nundah recorded the greatest rent increase of 5.9%, followed by Clayfield, St Lucia and Logan Central, which all had increases of at least 5%.

The manager of Run’s Springwood property management office, John Dawson, said prospective tenants were keeping a close eye on rental prices. The vacancy rate was about 2% while the industry standard suggests that 3% is a balanced market where the number of tenants and properties available for rent are about equal.

There were a growing number of new houses coming on to the rental market at Hope Island, north of the Gold Coast, and Redbank Plains, south of Ipswich, Dawson said.

Run figures relate only to new tenancies when one tenant moves out and another moves in, not existing leases that have been renewed with the same tenants. The figures are averages so not every property in each suburb will be affected equally.

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