Rents forecast to skyrocket again in 2024

A new report forecasts that overall capital city asking rents will rise by between 7% to 10% next year.

According to Louis Christopher’s Boom and Bust report Perth is expected to record the largest increase in market rents of 12% to 15%.

While Canberra is forecasted to record the largest declines of -6% to -2%.

According to SQM Research, for the past 12 months to the 20^th of November capital city, combined market rents have risen by 15.2%, while overall national rents, encompassing regional Australia have risen by 9.2%.

The severe mismatch of completed new dwellings for 2023 (expected to be approximately 175,000 dwellings) compared to an additional population expansion of some 575,000 people, has driven yet another year of market rental surges.

Since January 2020 combined capital city market rents have risen by 40.5%.

This is likely the fastest rise in rents since the 1970s.

SQM’s rental market assumptions for 2024 include population expansion slowing back to 455,000 people, and dwelling completions to fall to 153,000.

If SQM is right about its assumptions it will mean a further shortfall of some 20,000 dwellings for next year.

SQM expects tenants to respond with increased sharing (a rise in the number of occupants per dwelling).

If migration does not slow as expected it is likely rental increases will be greater than forecasted

While any better-than-expected building completion rates would somewhat help alleviate the shortfall.

Commenting on the rental forecasts, Louis Christopher, Managing Director of SQM Research said:

“Coming towards the end of 2023, the rental markets remain in severe, critical shortage.

Given what we know is in the pipeline for dwellings under construction, Australia is looking set to build less in 2024 than what was built for 2023 (an estimate of 175,000 dwellings).

I hope I am right about our forecast slowdown in migration rates, for if we have another year like 2023, we are going to have a very sharp rise in homelessness and the community anger on housing will be immeasurable.

In such a situation , I believe it would be a change of Government event.

As it is, the supply/demand imbalance is here to stay for another year which will likely mean further market rental increases of 7 to 10%.”

Here’s what’s happening to asking rents

Source: SQM Research

About Leanne Jopson
Leanne is National Director of Property Management at Metropole and a Property Professional in every sense of the word. With 20 years’ experience in real estate, Leanne brings a wealth of knowledge and experience to maximise returns and minimise stress for their clients.