Rent prices just rose at the fastest quarterly rate on record, making the market even harder to crack

By Emily Hutchinson

Published on 26 Oct 2022,

A combination of low rental stock and high demand continues to drive prices up across the country and experts say there’s no relief in sightespecially for tenants in capital cities.

PropTrack’s latest Rental Report for the September quarter shows rental prices have increased at the fastest quarterly rate on record, surging by 4.3% in the past three months to reach a national median of $480 per week.

“Australia’s rental market remains extremely tight, with vacancy rates and supply reducing further over the September 2022 quarter,” PropTrack’s director of economic research Cameron Kusher said.

“As a result, rental prices nationally continued to climb.”

The higher rental prices are partly driven by low levels of available stock, with the total number of rental listings on having decreased by 20.5% year-on-year, which is the lowest level since mid-2003.

That limited stock has coincided with an 18.8% surge in demand over the past year. As a result, the rental vacancy rate is just 1.6% nationally.

New properties tend to be snapped up quickly, Mr Kusher said, prompting tenants to pounce with a rental application ready to go.

In September, properties spent a median of just 19 days on before being leased.

Investors feeling unmotivated

Low rental stock is largely caused by the lack of investors active within the market, with mortgage lending trending down. New lending to investors in August 2022 was $8.9 billion, which is the lowest it’s been since June 2021.

“While there is some supply coming via build-to-rent, any additions are likely to be well and truly outweighed by the increase in demand from the re-opening of international borders and the ongoing decline in purchasing by first-home buyers,” Mr Kusher said.

“With fewer investors purchasing homes to rent out, the limited supply of stock, coupled with strong demand, is leading to heightened increases in advertised rental prices.”

City-based tenants most impacted

As tenants return to cities post-Covid, the impacts of low stock and rising prices are being felt most acutely across the capitals.

In the combined capital cities, rents increased by 3.2% over the quarter, while rents were unchanged in regional areas. 

The biggest year-on-year declines in total listings were seen in Sydney, down 24.2%, Melbourne, down 32,8%, and Brisbane, down 22.7%.

At the same time, these cities experienced the strongest increases in demand per listing, with Melbourne up 45.8%, Sydney up 26.8%, and Brisbane up 25.9%.

“The growth and tightness in the rental market appears to be shifting from regional areas back to the capital cities,” Mr Kusher said.

“This is being driven by the return of many people who migrated regionally during the pandemic back to capital cities and the lift in overseas migration. This is especially the case in our two biggest rental markets, Sydney and Melbourne.

“Most overseas migrants to Australia settle in these cities with few purchasing a property before arrival, which is likely to keep demand for rentals heightened as the supply of rentals is expected to continue to recede, pushing prices higher.”


The future is not so bright

Without investors, and with large numbers of renters descending on the market, there’s no easy solution to the current rental crunch in sight, Mr Kusher said.

It’s likely tenants will see prices continue to rise, especially in the cities.

“These demand and supply issues can be addressed but none of these factors appear set to change in the near term, which means a further tightening of rental supply and increases in rental costs seems likely over the coming year.”


Is now a good time to invest in real estate?


It’s been a rollercoaster of a year for both those in the stock market and in property. Unpredictable events have made a mystery of what to expect when it comes to investments and the economy at large. With inflation high and interest rates rising, people are looking for answers when it comes to where to invest.

What’s happening in the property market?

The last six months have seen a slight downward trend in sale prices across the Melbourne and Sydney markets in particular, while markets such as Perth and Adelaide have continued to show strong growth. Some say we are coming out of this ‘price cooling’ period, especially in areas of Queensland – which have proven to bounce back the fastest – yet some local property markets are still stalled. 

What’s happening in the stock market?

A mix of high inflation, rising interest rates and a generally uncertain macroeconomic environment has meant increased market volatility and uncertainty amongst investors in the capital markets around the world. At the time of writing, the ASX is flat after a rally post this week’s RBA announcement, however Macquarie believes the move doesn’t quite signal the start of a sustained rally just yet. Like many others, the experts are adopting a “wait and see” approach.

What does this mean for you?

In times of uncertainty or caution, investors traditionally seek safer alternatives to park their capital. Both stocks and property have offered good long-term returns but understandably, the current markets are making some a little nervous, especially with the potential of more rate rises.

We spoke to property experts across Australia to see whether stocks or property are a better option for the everyday investor right now. This isn’t financial advice, however, and it always pays to seek professional advice on decisions that take into account your personal circumstances.

Investing in stocks vs. property in Australia

Property economist and Co-Founder of BuyersBuyers, Pete Wargent, shares his thoughts on stocks versus property right now.

Stock market investing:

  • The ASX (Australian stock exchange) is different from the international stock exchange.  The ASX always has and still is performing better than its international counterparts. 
  • Stock market investment is becoming more accessible to even more Australians through diversified funds and low-threshold online investing platforms.

Property investing:

  • Allows you to leverage borrowed capital for a greater long-term return
  • Has a higher entry point when it comes to capital: you have to have that deposit in your account to get started. 
  • Property ownership comes with costs of upkeep and the risk that you may cover portions of mortgage repayment while the home is between tenants.

How do they stack up?

  • Both stocks and property have shown a 9% return per annum* consistently since 1994.
  • While the stock market offers ease in transacting, it also comes with volatility and fluctuations that are more pronounced than the volatility experienced in property.

Is now a good time to invest in property?

Matt Scafidi, Owner of Abode Advocacy Group notes that while many property investors are pausing during this media storm, in his opinion now is in fact a good time to buy in. 

He says, “Whilst others are waiting to see what happens, you will be able to secure a high-performing investment property at a price you could have only dreamed about 6 months ago.” He continues, “Those who wait too long will end up buying as the market starts to head back up.”

Adding to that, Joe Hanna, Group CEO and Managing Director of PropTech Group, which operates Real Estate Investar, says, “Diversification is generally a key element of safe investing. Investors who can afford it often choose to have a mix of both equities and property, so it’s not really an either/or situation.” 

He adds, “If you can afford it, spread your investments among both stocks and real estate.”

Joe reminds new investors to think long-term with their investments, regardless of the current markets, “While prices are likely to fall and rates rise over the next 12 months, in five years I believe today’s prices will none-the-less look inexpensive.” 

His advice for those considering property investment right now is, “Take advantage of today’s market to buy a good-quality property that is easily rented, maximise your yield and minimise your expenses. Ensure you will be able to manage whatever debt you take on.”

Why property investment might be right for you


Pete Wargent says, “Since 2003, house prices have delivered a compounding capital growth rate of 5.8% per annum while units have delivered 4.2% per annum.” He continues, “Total returns from property investment over the past 20 years have therefore been somewhere in the range of 9% per annum. 

Pete explains that investing in property tends to help investors change their mindset to appreciate ‘long term gains’, adding that there are more property millionaires than any other asset class for a reason. 

Tangible assets and basic needs

To quote the obvious: houses are physical, tangible assets. While stocks offer incredible potential, property investment relies on a demand that will never die – the basic human need for housing. 

Build equity without paying for it yourself

Making smart property purchase decisions can ensure you have reliable cash flow from your investment property through rent, which serves to both pay off your borrowed equity and can also provide additional income through rental yield.

We spoke to leading Melbourne-based property manager Anna Molinaro from OBrien Real Estate, about keeping your investment property cash flow-positive. She explains, “If the rent exceeds the expenses and mortgage repayments, then the rental provider has a positive cash flow. It is important to have a positive cash flow when investing, in the event that the property may be vacant for a period of time.” 

The thing to consider with investment properties is the purchasing costs and ongoing maintenance costs. Property is a great long-term strategy for your investment portfolio, but don’t forget it comes with costs along the way. 

Potential tax benefits

Property investment tax benefits make this asset class an attractive investment to some e of those comes from potential negative gearing to offset tax. While ‘negative gearing’ isn’t a phrase used in tax legislation, it’s commonly used when asset-specific expenses, including interest expenses from a mortgage, are greater than the income earned from the asset. This would make your asset ‘negatively geared’. 

Individuals who are negatively geared can deduct that loss against other income (e.g. salary), usually minimising their tax owed. 

While it’s not ideal to have a property that costs more than it makes, it means that you could potentially l have something to gain from the property if you find yourself weathering a difficult market. It is advised to seek advice from a qualified accountant or financial planner prior to making any decision you make, though.

How to invest in property wisely

Get the right professionals involved

Matt Scafidi advises that the process and pressure involved in picking the right investment property can be overwhelming, especially for those new to the market. 

He says, “We always advise clients to have professionals in all areas for example an accountant, financial planner, solicitor and a property advisor. There are many streets in suburbs we avoid based on capital appreciation, rental returns or even particular apartment buildings.”

He continues, “It’s all based on performance for our clients and so out of all the properties on the market at any given time there are probably 2 in 100 that we would determine a ‘good investment’, hence why you need a professional on your side.”

Be open to options

Matt continues, “There are many choices for clients out there when investing in property. A common mistake we see made is investors having tunnel vision on either a particular property type or location.” 

He explains, “Your best investment decision could be regional, interstate, permanent or a holiday let – it just depends on your desired outcomes.” 

Matt concludes, “Investors should be open to all scenarios without bias to choose the property that will give the best performance return both on rental return and capital appreciation.”

Make sure the basics are covered 

Because investment properties come with associated costs for upkeep and more, it’s important to check if a property ticks all the basic boxes before committing. 

Anna advises, “When purchasing an investment property, it’s important to ensure the property meets the minimum standards and that as a rental provider you adhere to The Residential Tenancies Act, especially with the new changes that have come into effect.”

She continues, “Always look at investing in an area that will provide a good rental return. Location, public transport, schools, shops  are important to renters.”

Find out more about Australia’s best suburbs to invest in, check out our suburb and street  reviews. 

If you want security, go for a long-term tenancy-appropriate property

Anna explains, “We find that rental providers prefer the stability of having their renter on a fixed term rental agreement. If you’re fortunate to have secured a renter on a fixed-term agreement with steady rental payments, you can rest assured that your rental income will be consistent.” 

She warns, “It is, however, important to have some cash flow in the event that unexpected situations may arise in the event that the renter’s circumstances change; whereby you’ll need to be able to service the mortgage for a period of time.”

Things to be mindful of when deciding whether to invest in property: 

  • Stamp duty and land taxes upon purchase
  • Liquidity. With a property, you can’t simply pull your money out if you need it so it’s important to not overextend yourself with the purchase
  • Maintenance costs. Rental provider legislation is tightening to ensure tenants have safe and healthy homes to live in. Unfortunately, this upkeep can make being a landlord costly. Be sure your property is ‘up to scratch’ already
  • Get a professional involved to help steer you in the right direction. In a changing market with so much to consider, what may appear a great deal upon purchase could end with you owning a low-performing asset that doesn’t grow in value.
  • Problematic tenants. Make sure you use a reputable property manager to ensure your investment is in good hands. Wear and tear happens, but good tenants make life a whole lot easier. 


Again, seek professional financial advice before you make any decisions. There are plenty of options out there for those with capital to invest and property remains a viable one for many Australians.


Scrapping of controversial Queensland land tax a win for mum and dad investors

By Nina Hendy

October 6, 2022

Investors will be circling the Sunshine State on the hunt for their next purchase after Queensland Premier Annastacia Palaszczuk backed down from a controversial land tax change.

The tax would have penalised interstate landowners with investment properties, but the premier was forced to dump the land tax after a public backlash from the property sector and other state leaders.

The backdown is a win for mum and dad investors after reports that some were instructing their agents to sell their rental properties.

The decision follows heavy lobbying from the property sector.

The Real Estate Institute of Australia is relieved that Palaszczuk has had a change of heart on the land tax, arguing that a government can’t treat investment in housing differently to that of other asset classes without significant consequences.

“The proposal showed a total lack of understanding of the investment market, with recent studies showing that investors were moving out of that market in response to the possibility of paying more tax,” REIA president Hayden Groves said.

He likened the land tax proposal to when the then-Labor government ceased negative gearing in 1985, only to reinstate it two years later.

However, suggestions that the controversial land tax was impacting renters and was tied to the rising rents in Queensland were incorrect, according to Tenants Queensland, which insisted that it’s a lack of supply that has resulted in steep rent increases.

Domain data shows Brisbane’s vacancy rate remained unchanged over the month of September at an extremely low level of 0.6 per cent for the fourth month in a row – but it also worsened considerably in the past year, falling from 1.3 per cent in September 2021.

However the number of vacant rentals had increased, which indicated that Brisbane’s rental market could be stabilising, providing relief to potential tenants, said Domain’s chief of research and economics, Nicola Powell.\

The Property Council of Australia has also agreed that abandoning the land tax was the right decision given the unpredictable impact it could have on rental affordability and investor sentiment.

“The complexity of the tax and its reliance on self-disclosure of individuals and data-sharing of other states further reinforces that this plan needed to be completely scrapped as opposed to just put on the shelf for another day,” PRIA Queensland executive director Jen Williams said.

Queensland was grappling with interstate migration and a large number of infrastructure projects to be delivered, with housing affordability as one of the most pressing issues for the state, she said.

PRD Real Estate chief economist Dr Diaswati Mardiasmo described the scheme as lacking sophistication, adding that shelving the land tax was a sensible measure at this point in time.

“Queensland investors are on shaky ground already, and this land tax would further shake confidence and result in added pressure for the rental market,” she said. 

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