Home Insights Inflation data shows there is still a two-speed rental market

Inflation data shows there is still a two-speed rental market

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Rent prices are rising nationwide, but Sydney and Melbourne lag behind other capitals. It can change quickly.

The latest inflation data from the Australian Bureau of Statistics shows rent for everyonel The city rose in the first three months of the year. This may be driven by a 16-year low rental vacancy rate across Australia.

Rents have risen in Sydney and Melbourne, but their growth is well below that of other capitals.

Rents in Sydney and Melbourne increased by 0.2% and 0.3%, respectively, while other capitals increased by at least 1% in the quarter.

Throughout the year, the growth contrast between the two largest cities and the other capitals is even more pronounced.

Rents have risen by at least 2.5% in other cities over the last 12 months, but rents in Sydney and Melbourne have actually fallen.

Rents in Sydney fell 1.2%, according to ABS inflation data.


This was the result of a pandemic-induced migration pause and continuous migration to remote work. Even with record low interest rates and government housing initiatives such as HomeBuilder, many Australians have left the rental market to own homes.

Looking at the weekly rents advertised on realestate.com.au tells a story similar to ABS inflation data.

In all other capitals, with the exception of Sydney and Darwin, weekly advertising rents have increased at a quarterly rate of change.

Sydney and Melbourne also showed no negative or no growth in advertising rents throughout the year, but are showing signs of growth throughout the quarter.

With the reopening of borders and the return of international students and office workers, demand in the largest capital has increased, contributing to a slight increase in advertising rent.

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The advertised rent data also provides information about areas that are not included as part of the CPI rent.

In all regions, regional NT outperforms their respective capitals in terms of rental price increases over the last 12 months. Rents in the regions WA, Tasmania, New South Wales and Queensland are growing the most.

Advertised weekly rents in the Tasmania region have increased by 15.2% over the past year.


The pandemic has accelerated migration to the region, but weekly rent changes advertised quarterly show that rent growth is about the same across the region and the capital.

The rental market is expected to remain tight for the next few months due to the return of immigrants, low vacancy rates and intensifying competition in the rental market.

Rent growth gaps in Sydney and Melbourne, and other capitals and regions, could close as rent demand increases in the largest capitals and eases in some regions.

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