Property investors have continued to see gains in rental income, but the pace of these gains is starting to slow, according to the latest data from CoreLogic. In July, the national median rent increased by just 0.1%, marking the smallest monthly rise since August 2020.
This deceleration in rental growth is being observed across both the house and unit markets. However, the slowdown is particularly significant in the unit market, which has been a focal point for investors in recent years.
CoreLogic’s research director, Tim Lawless, has pointed out that this easing in rental growth aligns with a peak in net overseas migration during the first quarter of 2023. The large majority of these overseas migrants, mostly students, arrive in Australia on temporary visas, which typically drives demand for inner-city unit rentals.
“The slowdown in rental growth suggests that some of the pressure on the rental market is easing, particularly in areas that are traditionally popular with overseas students,” said Lawless. “While rents are still rising, the pace of growth has clearly tempered, which could signal a shift in market dynamics moving forward.”
Despite this slowdown, the rental market remains tight, and investors are still in a favorable position, especially those who have invested in properties that cater to the specific demands of the rental market. However, as rental growth continues to moderate, it’s essential for investors to stay informed and adapt to the changing market conditions.
The combination of rising property prices, increasing rents, and low vacancy rates has kept the rental market competitive, but the recent trends indicate that the rate of rental increases may not be as aggressive as it has been in the past. This could provide some relief to renters, while still offering steady returns for investors.
As we move through the second half of the year, it will be interesting to see how these trends develop and what they mean for the broader real estate market in Australia.
Conclusion:
While the rental market continues to offer opportunities for growth, the recent data from CoreLogic suggests that the rate of this growth is beginning to slow. Investors and renters alike will need to keep a close eye on these trends to make informed decisions in the coming months.
