Asking rents for houses and units have jumped to new record highs in Australia's major cities, according to Domain's latest rent report.
In the March quarter, asking rents for houses saw their steepest quarterly gain in 17 years, and asking rents for units extended their record-breaking streak to 11 successive quarters of growth.
Vacancy rates decreased across all capital cities, except Hobart, and hit new lows in Sydney, Melbourne and Perth.
But Domain's researchers say there's hope on the horizon for renters because conditions are expected to turn more in renters' favour this year.
"While Australia's perilous rental market appears entrenched in a never-ending run of rent rises, we remain optimistic that a tipping point will be reached in 2024,"said Nicola Powell,Domain's chief of research and economics.
"Some sub-markets will operate with more balance, and rent growth will slow — some areas already show these signs," she said.
Australians facing all-time high rents
The figures can be found in Domain's latest Rental Report, for the March quarter.
In Adelaide, the median asking price for rents for houses increased by 5.4 per cent in the March quarter, up $30 to $590 a week.
In Perth, they increased by 4.8 per cent, up $30 to $650 a week, marking an annual increase of 18.2 per cent.
In Sydney, they hit $750 in the March quarter, up $20 to $750 a week, taking the annual increase to 13.6 per cent.
Records were broken across the board for house rents (see the table below).
When Domain talks about record figures, it's talking about a dataset that stretches back to 2004.
Only in Darwin and Hobart did asking rents remain steady in the March quarter.
In Canberra, median asking rents for houses increased by $5 to $685 a week, to be sitting just $5 below the record.
When it comes to units, the news for renters wasn't any better.
The median asking price for units broke fresh record highs in Sydney, Melbourne, Brisbane, Adelaide, Perth, and Canberra.
It means unit rents are at an all-time high across the combined capital cities, and all capital cities apart from Hobart.
The combined capitals have now seen a record stretch of 11 successive quarters of growth for asking rents.
Domain's researchers say the record asking rents for houses and units have been driven by exceptionally low vacancy rates across the country.
Combined vacancy rates for houses and units hit new record lows in Sydney, Melbourne and Perth in the March quarter, with Adelaide and Brisbane nearing record lows.
Canberra's combined vacancy rate of 1.4 per cent was the highest in the country, but that even fell from 2 per cent in the December quarter.
See the table below for asking rents for units.
A 'tipping point' on the horizon?
However, Dr Powell says the pressures driving record-high rents and record-low vacancy rates may ease this year, which offers hope for renters.
"Currently, we are seeing the number of prospective tenants per rental listing ease, suggesting some pressure has been lifted, she said.
"This could be an early indicator of an increase in vacancy rates sometime this year.
"Also, international student visa applications have turned a corner and started to fall for the first time in more than two years, population growth is likely to have peaked, and the federal government hasintroduced a migration strategy that will slow population growth.
"Home ownership is also at the forefront with incentives in place (such as Queensland doubling the first-home buyer grant and the federal government's 'Help to Buy' shared equity scheme), which will help transition some to being owners or fast-track others to a more affordable purchase," she said.
Cameron Murray, chief economist at Fresh Economic Thinking, agreed that the rapid increase in rents should ease off later this year.
"The reason rents are rising so quickly right now is because they were abnormally low before COVID and during COVID, so if we want to return to a historical norm in the market we need rents to rise, and they're doing so quite rapidly at the moment," he told the ABC.
"I think [it's true] that the second half of this year for renters will see much lower growth and less competition than the first quarter, and the second half of last year."
Dr Murray said renters, as a group, were also nearing the limit of what they could afford to pay each week and the pace of growth in rents had already started declining.
"If rents in an area rise, people have many, what we call in economics 'margins for adjustment': they can relocate, they can change the number of people per dwelling, all those sorts of things, and we do that because our income limits how much we can spend on rent, as it always has," he said.
"And previously rents were far below this [current level], and so they've risen rapidly, but now we're hitting that limit and that's what's going to be a major factor causing them to drop off," he said.
However, Michael Fotheringham, Managing Director of the Australian Housing and Urban Research Institute (AHURI), said any relief renters might feel later this year would not be sufficient to fix the deeper structural problems in Australia's rental markets.
"The private rental system is not able to meet the needs of lower-income households," he said.
"What we've seen increasingly over the last couple of decades is a shift in the profile of who's renting. What had been a younger cohort, and a moderate- to low-income cohort, has become a much broader range of people.
"People are renting for much longer, higher-income households are staying in rentals rather than purchasing because the threshold to get into home ownership is such a high purchase price … and that displaces those on lower incomes and increases competition for properties that are on the rental market," he said.
Dr Fotheringham said many low-income households were not even bothering to go to rental inspections anymore.
"There's certainly a group now who know they're priced out of the market," he said.
"They're not going to open inspections for rental properties because they simply can't compete with people on higher incomes who are chasing the same properties.
"The reality is, changes to student visas aren't going to radically change our private rental system, it's a niche part of the market.
"We're a long way from the end of this. These are long-range problems. We need more supply coming on, and the ambitions of all [levels] of government to radically increase the supply of housing, and social housing," he said.
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