Brisbane’s rental market, like much of Australia, has experienced an extraordinary boom over the past few years.
However, recent data suggests that the city may be moving toward a period of stabilisation. After years of rising rents, the rental market is beginning to cool as demand weakens. Understanding these dynamics is crucial for both tenants and landlords as they prepare for the future of Brisbane’s rental landscape.
Flatlining Rents After Years of Growth
Between August 2020 and June 2024, CoreLogic’s national rental index soared 39%, with Brisbane’s rental market riding the wave of surging demand. However, in July and August 2024, rents across the city flatlined, showing the weakest rental market conditions since the early stages of the pandemic. For some context, in the decade before the pandemic, rents rose by just 5.4% nationally.
In Brisbane, rents increased by 6.0% over the 12 months to August 2024 but only 0.1% in the most recent three months, signalling a slowdown. While rental growth typically slows towards the middle and end of the year, the current flatlining reflects broader shifts in rental demand, driven by affordability constraints and slowing migration.
Affordability and Migration: Key Factors Behind the Slowdown
Affordability has become a critical issue for Brisbane renters. Nationally, rents rose by 36.1% between March 2020 and June 2024, while wages only increased by 12.7%. This imbalance has pushed rental affordability to its limits, with many households now spending up to 32.2% of their income on rent. Such a strain on renters has contributed to a slowdown in rental growth, as many simply cannot afford further increases.
Another major factor is the shift in household formation. During the pandemic, the average household size shrank as people moved into smaller units or split from group households, driving up rental demand. Now, this trend is slowly reversing. Households are getting larger again, with more people sharing living spaces, whether through group living or multi-generational arrangements. As a result, rental demand is easing.
Migration patterns have also shifted significantly. The peak of net overseas migration in the first quarter of 2023 coincided with the highest rental growth across Brisbane’s unit sector. Since then, migration has slowed dramatically, reducing demand for rental properties. Fewer foreign students and temporary visa holders are arriving in Brisbane, which has historically driven up rental demand, particularly in units.
Easing Supply and the Role of Investors
While demand is softening, the supply side of Brisbane’s rental market is also beginning to catch up. The completion of new dwellings, particularly those spurred by the HomeBuilder program, is starting to relieve some of the pressure. Although construction delays caused by material shortages and cost blowouts have postponed many projects, as these new builds come onto the market, the demand for rental properties is expected to decline.
Investor activity is another factor influencing the rental market. The volume of lending to investors rose by 10.7% over the year to June 2024, with the value of this lending increasing by 30.2%. Investors play a crucial role in providing rental supply, and their increased activity is helping to ease supply-side pressures in Brisbane. As more investment properties enter the market, tenants may find more rental options, which could further stabilise rental prices.
Preparing for a New Phase in Brisbane’s Rental Market
Brisbane’s rental market is entering a new phase after years of rapid growth. Affordability constraints, changing household dynamics, and slowing migration are contributing to weaker demand, while new housing supply and investor activity are helping to ease rental pressures. For tenants, this could mean more stable rental prices in the months ahead, while landlords may need to adjust expectations and strategies to secure tenants.
If you need help navigating Brisbane’s shifting rental market, reach out to our knowledgeable property management team today. Our expert team is here to guide you through these changes and help you make informed decisions, whether you're renting or investing!
