The flexible, mortgage-free lifestyle of renting is an appealing option for some Australians, although renting can come with some potential drawbacks, including the hassle and costs of having to relocate when the lease is up or if the landlord decides to sell.
When deciding on a rental agreement, price can be a big factor for anyone sitting on the fence. The median rent across Australia is currently $436 per week, according to a new report from property research house CoreLogic. In capital cities, it’s $465 per week, while the regional areas have it slightly cheaper at $378 (but the report notes regional prices are starting to increase).
If the hustle and bustle of living in the ‘big smoke’ is appealing to you, it could be worth considering how Australia’s capital cities compare when it comes to rent prices.
Which are the most affordable cities for renters in Australia?
Taking out the top spot as Australia’s most affordable capital city to rent is Perth in Western Australia. It currently has a median rent that is nearly $200 cheaper than the most expensive capital city, Sydney.
Below, cities are listed from the cheapest overall median rent prices to the most expensive, as calculated in CoreLogic’s March 2019 Quarterly Rental Review.
1. Perth – $385 per week
Following a number of years of decline, Perth’s rental market is starting to climb again, according to CoreLogic. In the past 12 months, the median rent in Perth for all dwelling types has gone up 2.1% to $385 per week, and the gross rental yield (that is, how much rental income a landlord receives each year as a percentage of their property’s value) is currently 4.3%.
Domain Senior Research Analyst Nicola Powell said an improving local economy and jobs market in Perth would continue to support demand for rental accommodation, giving current residents more incentive to stay and encouraging new residents to move there.
Houses in Perth currently have a median rent of $393, and $351 for units. The national numbers are $435 and $439, respectively.
2. Adelaide – $386 per week
According to CoreLogic, the median weekly rent in Adelaide has gone up 1.2% over the past year to $386, while the gross rental yield is currently 4.4%.
Adelaide’s housing market is expected to benefit from improving economic conditions, such as more jobs, higher wages and increased migration, according to Domain.
Houses in Adelaide currently have a median rent of $399 per week, compared to $330 for units.
3. Brisbane – $436 per week
Median weekly rent values in Brisbane have gone up 1.4% over the past year to $436 after a number of years of declines, according to CoreLogic. The gross rental yield is currently 4.5%.
Brisbane’s property market is benefiting from affordability at a time of increased interstate migration from Sydney and Melbourne, according to property investment expert Michael Yardney. He said Brisbane’s oversupply of apartments has been a big focus, but is expected to ease.
Houses in Brisbane currently have a median rent of $453 per week, compared to $399 for units.
4. Hobart – $453 per week
According to CoreLogic, median weekly rent in Hobart has risen 5.4% over the past year to $453, making the once affordable city close to Melbourne prices. Hobart is the only capital city where rental yields have not increased in the past 12 months, with the gross rental yield currently at 5.1%, although the increases in Adelaide, Darwin and Brisbane were slight.
Houses in Hobart currently have a median rent of $469 per week, compared to $383 for units.
5. Melbourne – $454 per week
The median weekly rent in Melbourne has increased 2.1% over the past year to $454, and the gross rental yield is currently 3.6%. CoreLogic says there has been a significant increase in the number of new rental properties in Sydney and Melbourne over recent years, with both cities experiencing strong demand from investors and a substantial increase in apartment construction in recent years.
Melbourne currently has a median rent of $458 per week for houses and $450 for units.
6. Darwin – $458 per week
According to CoreLogic, Darwin has had years of falling rents. Its median weekly rent dropped 5.7% over the past year to $458 and the gross rental yield is currently 6%.
Darwin’s house prices are now at the lowest level since 2009 on the back of poor population growth and the end of a gas construction boom, according to the Real Estate Institute of the Northern Territory.
Houses in Darwin currently have a median rent of $502 per week, compared to $385 for units.
7. Canberra – $550 per week
Canberra is now the second most expensive capital city on average for renters in the country. It has a median weekly rent of $550, up 3.6% over the past year and a gross rental yield of 4.9%.
Houses in Canberra currently have a median rent of $576 per week and $488 for units.
8. Sydney – $582 per week
Sydney remains the most expensive capital city on average for renters in Australia, with a median weekly rent of $582. This is despite the median having fallen 3.1% in the past year. The gross rental yield is currently 3.5%.
According to CoreLogic, Sydney accounts for a large share of the country’s renters, meaning its falls have impacted the performance of the combined capital cities’ rent prices. The Sydney market has been impacted by demand and supply issues.
Houses in Sydney currently have a median rent of $613 per week, compared to $554 for units.
Rent landscape in Australia: How does it compare to home ownership?
The most recent (2016) census data showed the proportion of Aussies renting is slowly growing – almost 31% now lease compared to just under 30% five years ago and under 27% in 1991. The percentage of homeowners paying off their mortgage barely changed from the previous two census reports, while the proportion of those who own their homes outright declined.
CoreLogic’s findings from its March 2019 Quarterly Rental Review showed median rent across Australia is currently $436 per week. How does this stack up against home ownership?
If you take an average home loan amount of $400,000 and the current average interest rate from Canstar’s database of 4.42% and a 25-year term, it would cost a homeowner $508 per week in repayments. This is in addition to any fees that a lender may charge and assuming that the rate stays the same over that time.
While this example shows weekly mortgage repayments can be higher than the median weekly rent, it is important to note that the example doesn’t take in all home ownership and renting variables.
Also, everyone’s circumstances are different and are dependent upon how much is borrowed, where you live and whether home ownership or renting is the better option for you considering your circumstances.
Image Source: Lev Kropotov