Australian renters are enjoying some long-awaited relief as prices begin to ease slightly, but a leading expert says it’s still a landlord’s market and that the rental crisis is still far from over.

Capital city asking rents recorded their largest falls since the pandemic during July, according to data from SQM Research, down a combined 0.5 per cent across the largest Australian cities.

It’s welcome for renters who have been hammered by double-digit price increases in recent years that has resulted in a long-running crisis across the market becoming worse and worse for families.

My Housing Market chief economist Andrew Wilson said that rent growth has eased amid a slight loosening in vacancy rates in recent months, but that it’s unclear if the trend will persist.

“The question is how much of this is a seasonal effect through winter or how much of this is a rebalancing of the market,” he said.

“It’s a better news story for tenants, that’s for sure, but our market still remains tight. Our vacancy rates are still in the ones for all capital city houses and pushing up to two, but still in the mid-ones for units.”

Rent eases

After record increases in recent years, rents are easing markedly across the big cities.

Average rents in Sydney fell 1 per cent to $829 a week in July, according to the latest SQM figures, while Melbourne declined 0.6 per cent to $632 per week.

The heart of Sydney also eased, with rents in the central business district down by 1.6 per cent.

Even conditions in Australia’s hottest property markets of Brisbane and Perth eased for renters.

Rents fell 0.5 per cent in Brisbane and 0.6 per cent in Perth, though Adelaide – a market that has also been growing strongly lately – increased by 1.1 per cent.

Elsewhere, rents also rose in Darwin, up a substantial 6.4 per cent from a much lower base.

SQM found that rents fell fastest in coastal regions, with Queensland’s Gold Coast recording a 1 per cent decline for the month and Mornington Peninsula in Victoria experiencing a 1.4 per cent fall.

Rent crisis not over

SQM managing director Louis Christopher said the falls are the biggest since the onset of Covid-19 in 2020, but that conditions across the market are still tough for renters.

Rents are still very high and this market contraction is minor compared to the massive rise in rents recorded around the country since 2021, he said.

“It should also be stated that the rental crisis is still not yet over as we have recorded an ongoing low national rental vacancy rate of just 1.3 per cent,” Christopher said.

“But still, this will be somewhat welcoming to tenants and as a research house, we do believe the market rental rises of 10 to 20 per cent per annum are now over.”

Wilson said the factors behind the easing vacancy rate and rents are more on the demand side of the market than due to an expansion in housing supply.

Namely, affordability concerns are forcing Australians to make more difficult choices about where and how they can live, which is taking some of the heat out of big city rental markets.

“A lot of it is coming from social change. People’s choices for rental properties are shifting because they can’t afford segments of the market or can’t afford to be in the market,” Wilson said.

“There’s a postponement of decisions, houses versus units, regional units versus capital city areas, inner city versus outer city – those types of shifts are because of affordability constraints.”