Rapidly increasing unit rents across Australia’s major cities are closing the gap on average house rents as the nation’s housing crisis continues to worsen.
The price difference between renting a unit and a house across Sydney, Melbourne, and Brisbane is narrowing by the day in a harrowing warning of what’s to come for Aussie renters.
The data revealed in an alarming report by construction and property price monitoring group MCG Quantity Surveyors, shows a concerning change in market conditions and demand levels across the eastern seaboard.
Unit rents rising at 3 times the rate of house rents
In Sydney, unit rents rose 20 per cent over the last year compared to just 7 per cent for house rents.
Meanwhile, in Melbourne, unit rents rose by 20 per cent while house rents increased 6 per cent since February 2023.
And similarly Brisbane renters witnessed a 17 per cent increase in unit rents compared to just a 7 per cent increase for houses.
But it’s not just the nation’s largest cities that have seen unit rents rise at disproportionate rates to the rest of the rental market, with Gold Coast suburbs seeing a contrast of 13 per cent increase for units versus 3 per cent for houses, while the gap in some Gold Coast suburbs reduced by $105 a week.
Sales and marketing expert for Ray White Burleigh Group Nick Lapenna told Build-it that renters were seeking units as a cheaper alternative to houses, but the increased demand and lack of availability were now forcing unit prices to rise disproportionately.
“The rental market is at an all-time high now for both houses and units, there’s simply not enough supply,” he said.
“A big part of what’s happening is because housing is so expensive – no one can really afford to spend $1500 dollars a week to go rent a nice house, so they’re downsizing for units.”
“But outside of certain pockets, units aren’t as freely available, in fact, in many regions, they are significantly undersupplied.
Nick says an increased number of older Aussies seeking lifestyle changes was also behind the rising demand for units.
“Some people are downsizing from renting houses as they don’t want to spend their weekends gardening or at home doing maintaining on the house,” he told Build-it.
“Others it’s just for lifestyle changes so they to be closer to areas they want to live, either the beach or parts of the city.”
Unit rents are closing the gap on house rents across Australia’s 3 largest cities
Renters turn to units in cost of living crisis
The statistics are reflective of tough housing conditions for renters, who now find the price difference between choosing a unit over a house diminishing.
Supply and demand has been another key reason for the rising rents, with vacancy rates in Sydney, Melbourne and Brisbane at 1.3, 1.1 and 1.0 per cent.
Mike Mortlock, managing director of MCG Quantity Surveyors, says the price shift demonstrates a change in renter preferences, which are seeking units as a way to minimise rental expenditure and maximise lifestyle preferences.
“This is indicative of a deeper change in the market, influenced by evolving preferences and housing market conditions,” he said.
“The accelerated growth in unit rents compared to houses suggests a strong demand for more affordable, centrally located living options.”
“These trends are not just numbers; they tell the story of Australians’ shifting lifestyle aspirations, with a clear tilt towards higher density living options.”
Mr Mortlock believes the statistics make purchasing a unit investment property a more attractive proposition to investors.
“For investors, the rising unit rents in inner-city areas point to a potentially higher yield in the short to medium term. However, this opportunity comes with considerations such as strata fees and the ongoing supply of new developments.”
“It’s crucial for both renters and investors to stay informed about these trends as they shape the future of our cities.”
