• Australia’s rental market is recovering at the fastest rate since 2007, according to CoreLogic data.
• Rental rates spiked 3.2% over the March quarter, with median rents for regional units leading the charge.
• The key outlier was Melbourne, which continues to lag behind other metro and regional players thanks to a drop in international migration.
• Visit Business Insider Australia’s homepage for more stories.

Australia’s rental rates are rising at their fastest rate in 14 years despite Melbourne’s sluggish market recovery, according to a new report.

In its latest Q1 findings, property analytics firm CoreLogic states rental prices nationwide spiked 3.2% over the past three months, the highest quarterly uptick recorded since May 2007.

The increase was largely driven by interest in regional markets, which reported a 4.1% rise over the quarter — up from the 2.9% price growth tallied in the three months to December 2020.

Regional house rents jumped cool 4% over the period. But the real winner was the regional unit market, which scrambled up by 4.8%.

On average, renting outside of Australia’s capital cities will now cost a tenant $431 per week. All told, that’s up by 8.6% on the levels recorded one year ago.

Darwin led the charge for Australia’s metro regions, reporting a 7.7% increase over the quarter, and an astonishing 16.% premium over the past twelve months.

Hobart followed behind, posting a 6.1% quarterly hike. Rental prices increased for both units and houses for capital cities across the board.

Not bad for a post-lockdown rental recovery.

While Sydney rents grew ‘just’ 2.8% in the quarter, the main outlier was Melbourne, which remains suppressed compared to its interstate counterparts.

While the average rental growth in capital cities was 3.3% for the quarter, Melbourne home rentals climbed a comparatively paltry 1.6%, while unit rentals remained stagnant.

In year-on-year terms, Melbourne’s median rental rates are 3.0% below March 2020 levels.

The findings comport with prior data on Melbourne’s unit rental market, which has softened since Australia’s international borders closed — shutting the door to the many thousands of international students and migrants who would otherwise opt for apartments in Melbourne’s inner suburbs.

The figures also lend credence to Domain senior research analyst Nicola Powell, who argued this month that work-from home conditions allowed some workers to flee Melbourne’s inner suburbs, while well-off renters who flourished during pandemic shutdowns may have simply bought their own property.

While the numbers may be good news for Melbourne’s moneyed renters looking to snag a deal before the market fully rebounds, CoreLogic says the outcome of suppressed rents and elevated property prices is lowered yields for the city’s landlords.

Even then, many property owners are expected to make good from the deal.

“Outside of Sydney and Melbourne, with mortgage rates so low, yields are generally high enough to provide investors with positive cash flow opportunities from the outset,” CoreLogic research director Tim Lawless said in a statement.

Lucky for some.

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