The rental market finished the year strong, with December clocking the largest monthly increase in rental rates since 2010, as the regions continued to outperform capital cities.
CoreLogic’s Rental Review for the December quarter found that rental rates grew by 0.6 per cent in December alone, hitting a 10-year record on the back of a strong 0.9 per cent rise in house rental rates. In contrast, unit rents fell by 0.1 per cent.
The rental market also hit another record in 2020, with national rents rising 1.9 per cent annually, equaling the largest annual increase across the dwelling market since mid-2018.
Across the country, regional areas continued to outperform capital cities, as inner city unit markets bore the impact of reduced demand amid the COVID-19 downturn.
“COVID-19 not only disrupted how we live, but also reshaped housing demand as accommodation preferences swung towards lower-density options,” said CoreLogic research director Tim Lawless.
“Higher-density housing markets have seen less demand during the pandemic; a trend that has been amplified by stalled overseas migration and remote-working opportunities luring residents further afield. Whether this trend has some longevity is yet to be seen.”
As such, both house and unit rents moved up 1.1 per cent in December, taking house rents 2.9 per cent higher over the final quarter of 2020 and unit rents 2.6 per cent higher.
In comparison, capital city house rents increased by 0.7 per cent in December to be 0.8 per cent higher in the final quarter, while capital city unit rental rates fell by 0.3 per cent over the month to finish 1.6 per cent down.
The inner city unit markets in Melbourne and Sydney emerged as the biggest losers, having suffered drops of 7.6 and 5.7 per cent, respectively, over the past year.
On the other hand,and Darwin performed best in 2020, with dwelling rents up 9.7 per cent and 8.8 per cent, respectively.
Canberra too profited, emerging as the most expensive capital city to rent in 2020, with a median house rental value of $624 per week.
Meanwhile, the decline in rental yields proved that dwelling values outperformed rental growth in 2020, according to CoreLogic.
Over the year, the national market recorded a gross rental yield of 3.71 per cent, down from 3.81 per cent a year earlier.
Hobart recorded the largest annual fall in gross yields for houses, down to 4.47 per cent in December 2020 from 5.03 per cent in December 2019.