How has the pandemic impacted Australia’s rental markets? April 2023

Three years on and the dust has largely settled from the pandemic, with the international border open, restrictions eased and employees slowly returning to the office.

Australia’s property market has also shown signs of stabilising following both the steepest upswing and downswing on record, albeit with home values 14.8% higher in February 2023 than in March 2020, according to CoreLogic.

But while many things might be reverting to pre-pandemic norms, Australia’s rental markets are dealing with a critical lack of supply that saw the national vacancy rate fall to 1.47% in February, according to PropTrack.

That’s half its pre-pandemic level and well below the 3% vacancy rate that’s generally considered a sign of a balanced market.

As the table below shows, nearly every capital city and rest-of-state region have seen a significant tightening since March 2020, led by Perth where the rental vacancy rate has plummeted by a staggering 69%.

With rentals hard to come by, fierce competition for the few available is driving prices through the roof, with national rent values up 23.1% since March 2020, according to CoreLogic.

For comparison, annual growth in national rent values averaged 2.1% throughout the 2010s.

So why is it so hard to find a rental in Australia since the pandemic? Because demand is vastly outstripping supply.

That’s because, during the pandemic, many Australians wanted more living space, which caused average household sizes to drop from 2.59 to 2.55. This, in turn, increased demand for properties.

However, skyrocketing costs in Australia’s construction industry meant the number of new home builds didn’t keep pace with the number of new households formed. At the same time, soaring property values saw many investors sell off their properties to cash in on the capital gain, reducing rental stock further. 

When the international border reopened and overseas migration and tourism returned, the screws only tightened further.

Demand for rentals expected to remain strong

Many market commentators don’t expect rental supply to improve anytime soon.

Higher interest rates caused the volume of investment loans to fall by 47% in January 2023 when compared to March 2020, according to the Australian Bureau of Statistics. Interest rate rises have also seen building approvals tumble to 10–year lows. Meanwhile, overseas migration has rapidly rebounded.

Taken altogether, it suggests rental prices will continue to climb.

Looking to buy a quality investment property? As an expert buyer’s agent, A Game Property Advisory can help you secure the best property at the best price. Get in touch with Jim by calling 0422 446 170 or emailing jim@agameadvisory.com.au.