Apartment Rent rising faster than Houses

Recent reports by Domain show that Sydney apartment rents are on track to set a new record high as they rise faster than houses.

The record breaking streak continued across Sydney through the June quarter with house rents rising to a new high.

The detailed reporting for June shows that house rents jumped by 3.3% over the June quarter to a new record high of $620 a week; this is the steepest annual increase since 2009, at 12.7%.

In addition to this, apartment rents continue to rise faster than houses after surging by 5% over the June quarter to $525 a week; this is the steepest annual increase in 14 years, at 11.7%.

What does this mean? Unit rents are now higher than they were at the start of the pandemic and they are closing in on the 2018 record high of $550.

This is a milestone that’s been achieved each quarter for the past year and a half. The spiralling demand for houses has pushed rents 19.2% higher since March 2020, at the same time unit rents rose only 1%.

However, the affordability constraints of renting a house are becoming ever more apparent and directing demand to units. This stark performance difference drove a record rental price gap by the end of 2021 but this is now narrowing as affordability constraints steer demand pressure towards units.

This became particularly evident over the June quarter, with an easing pace of house rental price growth and an accelerating one for units.

This the first time in 14 years that unit rents have risen at the current annual pace and have outpaced house rents in the first half of 2022.

Unit rents are now higher than at the start of the pandemic and they are on track to surpass the 2018 record high next quarter if they continue at the current growth rate.