The Most Expensive Rents Aren’t Always In The Capital Cities
The recently released results of the 2011 Census showed that growth in rental payments was eclipsing growth in mortgage repayments, a fact that is supported by our data with rents growing at a faster pace than values over recent years.
The 2011 Census showed that across the nation, median housing loan repayments rose by 38.5% over the five years since the 2006 Census while rental repayments increased by 49.2%. Similarly, over the past five years our data highlights that rental growth has outpaced growth in home values. Although rental growth has broadly slowed, the fact that home values are generally still falling means that growth in the cost of renting is continuing to outpace growth in the cost of purchasing.
The first table details the 25 council areas across the country with the highest median weekly advertised rent. Port Hedland in Western Australia which is a major shipping port in the Pilbara region has the highest advertised rents for houses at $1,900/week. Three of the four most expensive council areas for house rents are situated in mining and resource regions (Port Hedland, Roebourne and Isaac).
Five of the 25 most expensive regions for house rents are located in regional markets, four of which are linked to the mining and resources sector. The remaining top 20 are all situated in capital cities and largely within Sydney or Perth reflective of the high rental rates in these cities.
The most expensive council areas for unit rents are the Queensland region of the Central Highlands which is heavily linked to the coal seam gas industry and in Perth. Rents in these regions are currently recorded at $650/week. Reflecting the results across the housing market, only four of the top 25 suburbs are in regional areas of the country with Sydney and Perth regions otherwise dominating the list.
Focusing on the council areas with the greatest increase in advertised rental rates over the past year shows that rental growth has largely been strongest in regional markets.
Across the housing market rental growth has been strongest exclusively in council areas outside of the capital cities in New South Wales, Victoria and Queensland. On the other hand, rental growth in Western Australia has exclusively been strongest within Perth council areas. Across the housing markets nationally, rental growth over the past year has been strongest within Cambridge in WA (47.1%) and Roma in Qld (46.5%).
Growth in unit rental rates over the past 12 months has been strongest within the Gladstone region of Qld (66.7%) and Muswellbrook in NSW (39.3%). The vast majority of council areas recording the largest increases in weekly rents for units were in regional markets and once again located in New South Wales, Victoria and Queensland they were exclusively located outside of the capital cities.
Overall, the data highlights that housing shortages in certain regional townships, particularly those linked to the mining and resources sector, has driven rental rates to very high levels. In some other regional markets linked to the same sector we have seen very strong rental pressures over the past year which may be a cause for concern for local governments.
Away from the regional markets, rental rates are clearly very high in certain council areas of Sydney and Perth. These regions tend to be located close to the city centre or adjacent to water. These areas carry a further risk of rental price appreciation given that in both markets new housing supply entering the market remains at quite low levels.
Should rents remain at these levels or increase further it may create the impetus for those that are currently renting to consider purchasing their own home. Especially considering home values have been falling for around a year and a half and interest rates have fallen and may go lower. Keep in mind that both factors coupled with the increases in rental rates have led to improving levels of housing affordability.
Thanks to rpdata.com.au for the data