Australia’s residential rental market has entered a more measured phase, offering landlords stability without ignoring tenant strain. CoreLogic’s latest Housing Value Index shows the national rental index rose 0.6 percent in each of the past three months, while annual growth has slowed to 3.6 per cent, down from 8.3 per cent a year earlier. Demand nonetheless still exceeds supply in most districts.
Annual rent increases have cooled in Perth (13.6 to 5.7 per cent), Melbourne (9.4 to 2.0 per cent) and Sydney (now 1.9 per cent, the slowest since 2021). Hobart and Darwin have re-accelerated to 5.4 and 5.0 per cent respectively. Owners in softer capitals should budget for flatter rises, whereas those in smaller markets must weigh returns against community sentiment.
Rents continue to outpace values, driving national gross yields to a two-year high of 3.73 per cent. Regional holdings remain more lucrative at 4.41 per cent, while metropolitan assets average 3.52 per cent–their best level in eleven months. In low-return cities such as Sydney and Melbourne, yields sit between 3.1 and 3.7 per cent, demanding tighter cost control.
Importantly, yields are trending above pre-pandemic norms. The combined-capital figure of 3.52 per cent surpasses the 3.45 per cent available five years ago, while the regional average, though down from 4.83 per cent, remains attractive. Moderate rent adjustments can therefore lift income streams without stretching household budgets unduly.
Capital growth still underpins longer-term wealth. April lifted the median Australian dwelling value to $825,349 after a 0.3 per cent monthly rise, and every capital gained. Even so, the national annual pace has eased to 3.2 percent, reminding landlords that cash flow rather than speculative uplift should dominate planning this year.
Supply constraints are pivotal. Dwelling commencements fell 4.4 per cent in the December quarter and sit 16.5 per cent below the decade average, while construction costs edged 0.4 per cent higher in March, delaying projects and limiting fresh stock. Until approvals recover, tight vacancy rates are unlikely to ease, supporting rental stability yet keeping affordability in the spotlight.
Policy settings may soon shift. February’s 25-basis-point rate cut rekindled buyer interest, and analysts expect another move in May together with election pledges to boost housing supply. Lower funding costs will assist landlords refinancing or expanding, although loans will still be stress-tested above market rates.
Prudent management therefore matters more than opportunistic hikes. Consider staggering reviews to align with CPI, offering longer leases to secure dependable occupants, and investing in energy-efficient upgrades that reduce tenant bills while enhancing asset appeal. Transparent discussions about increases preserve goodwill and cut turnover.
Landlords should also audit portfolio balance. Regional properties presently deliver stronger yields, yet capital-city dwellings offer deeper tenant pools and superior liquidity. Diversifying across geographies and dwelling types can hedge income volatility. Where cash flow allows, channel surplus rent into principal reduction to offset future rate rises.
