THE rental market has had a record-breaking year, with house and unit rents at all-time highs across the country following Australia’s steepest annual rental increase on record.

According to data from leading property marketplace, Domain, the Rent Report for the December quarter shows it has been a record-breaking year for the rental market with an annual rental increase of 11.1 per cent for houses and 7.9 per cent for units across the combined regionals.

The December 2022 quarter also marked the longest stretch of continuous rental price growth as house rents rose for the seventh consecutive quarter and unit rents for the sixth.

Domain’s chief of research and economics, Dr Nicola Powell, said rents are rising at the fastest annual pace ever seen, and the number of vacant rental properties was at an all-time low for the month of December.

Locally, Graham Chalmer Real Estate director Mark Ventrella verifies this trend, confirming rental prices are the highest they have ever been.

“Rental prices certainly have risen,” Mr Ventrella said.

“This would be the highest [rental prices]; these things rarely go down in any significant sense.

“What real estate will do is it will go up for a while if circumstances are good, and then it will stop. It will just stop going up for a while, it may go down just a little bit, but if you look at Melbourne, they went up 25 per cent and have come back 10.

So it’s sort of two steps forward, one step back, but it’s never two steps forward, three steps back; that needs some enormous catastrophe to happen.”

According to data from realestate.com.au, Sale’s median rental price is $440 per week, an annual rental increase of 12.8 per cent, and Stratford’s median rental price is currently $460 per week, an annual rental increase of 3.4 per cent.

Maffra and Heyfield have had significant annual rental increases of 29 and 34.4 per cent, respectively, with the median rental price in Maffra being $400 per week and $430 per week in Heyfield.

Mr Ventrella attributes the large annual rental increase in Maffra and Heyfield to the number of properties available.

“[They are] very small pools, so any changes are big changes,” Mr Ventrella said.

“If, for instance, you’ve only got five properties to rent and three of those landlords increase rent price, all of a sudden 60 per cent of your [regions] landlords have risen [the rent price]; any movement is amplified because it’s such small numbers, your sample base is so small.

“There is always very little available [to rent in the region], even in times when we have a lot of vacancies,” Mr Ventrella added.

“Sale is one of those places where you have a very transient population, so people come and go, military, oil, police, they come and go come and go, and we don’t have a large number of properties.

“A lot of those properties are owner occupied, so only a small section of those are investors, and there are a lot of tenants, so it all comes to supply and demand.

“Not a lot of supply and generally pretty strong demand all the time.”

With tourism, overseas migration and international students placing significant pressure on supply, the rental market has become extraordinarily tight during the December quarter, Australia-wide.

Rising demand across the rental market fuels the landlords’ market, thus placing further pressure on renters in many parts of the country.

Dr Nicola Powell said last year’s highly competitive rental market is going to be amplified as Australia embarks on the busiest period in the rental calendar in January.

“Due to a seasonal lift, those on the hunt for a new lease this quarter will find slightly more choice, as the rental market moves into its busy changeover period at the start of the new year, freeing up some homes for a short amount of time,” Dr Powell said.

“Amid Australia’s cost of living crisis, we predict that units will be a popular option for those looking for a rental this year. Unit rents have been growing faster quarterly than houses in most capital cities, likely because affordability concerns continue to persist.

“Units in Melbourne’s CBD jumped by 33.3 per cent over the past year. This suggests that budget-conscious tenants are making the shift from houses to units to suit their current budgets while still being close to work, school and amenities.”

Mr Ventrella says while the COVID bounce and interest rate hikes have made it “slightly harder to rent”, this time of the year is always busy across both the rental and buying market.

“This time of year is very busy; not only are homeowners buying and selling at this time of year, but there’s also an influx of renters especially,” he said.

“People generally move around this time of the year; it’s always a hard time to rent, and that’s historic every year.”

According to Dr Powell, several factors have contributed to the current state of the rental market, and there is no quick fix to alleviate its extremely competitive nature.

“The government’s commitment to building more housing is a great start, but we need to see further progress and a change in land use and planning rules to allow for more homes to be built in middle-ring suburbs,” Dr Powell said.

“With the population increasing, rising investor activity is needed to assist with Australia’s limited rental market supply, advancements to the build-to-rent sector and more assistance from the government to help shift more tenants into home ownership.

“Investors should be encouraged to participate in social, community and affordable government housing programs. On top of that, seeing meaningful improvements in gross rental yields this quarter will hopefully encourage investor activity helping to address supply issues.”