Over the past year, we’ve seen a notable surge in weekly rents for both houses and units, but here’s the kicker: unit rents are climbing at a much faster pace than those for houses.
According to PropTrack’s data, house rents have jumped by 10.5% year-on-year nationally, adding an extra $55 to the weekly bill.
However, unit rents have shot up by an impressive 17%, translating to an $80 increase each week.
Capital city spotlight
Karen Dellow, Senior Data Analyst at PropTrack said that this trend is even more striking in our capital cities, where the growth in weekly unit rents is double that of houses.
Across the board, all capital cities have reported a steeper increase in unit rents, with two exceptions – Canberra and Hobart, where the rental market has hit a plateau.
Take Brisbane, for instance.
According to PropTrack’s data, Brisbane has the most significant gap between house and unit rent growth rates.
House rents in Brisbane are at a median of $600, up by 9.09%, whereas unit rents have soared to $535, a substantial 18.89% increase year-on-year.
Meanwhile, Sydney remains the priciest city for renting either a house or a unit.
The median rent for a house there stands at $720 and $650 for a unit.
But over the past year, house rents in Sydney have grown by 10.77%, while unit rents have leapt by 18.18%.
Then there’s Hobart.
Its property market marches to its own drum, with median weekly rents for both houses and units holding steady over the year.
Canberra’s market, on the other hand, is cooling off, especially after the extraordinary price growth seen during the pandemic.
Here, we’ve seen a slight decrease of 1.45% in median house rents, while unit rent growth has been minimal, at just 0.91%.
So, what’s behind this significant jump in unit rents?
Ms Dellow said that during the pandemic, units were a bargain – many remained vacant in city centres due to the absence of overseas students, migrant workers, and interstate migrants.
This caused prices to dip below typical market values, particularly in Melbourne and Sydney.
Meanwhile, house rents kept climbing.
She noted that this trend reversed around the end of 2021 and early 2022, aligning with our borders reopening.
A mix of heightened demand and scarce availability has since pushed rents up.
The competition is fierce at inspections, and many renters, facing higher costs for houses, are adjusting their expectations downwards.
Interestingly, many renters are now offering more than the listed rent to outdo rivals, further driving up weekly rates.
This market shift has allowed units to bounce back, recouping the price growth lost during the pandemic.
And with the current record-low vacancy rates, this growth is set to continue.
With vacancy rates at critical lows in both capital cities and regional areas – particularly for houses – more renters are pivoting towards units.
Given the current market dynamics, we can expect weekly rents to keep climbing throughout 2024.
For renters under financial strain, units are emerging as the more budget-friendly option compared to houses.
