City apartment rents catching up with houses

Apartment rents are rising so fast in our biggest cities that they are catching up with house rents, according to a new report.

New data reveals a consistent rise in average house rents from $650 in February 2023 to $700 by February 2024, while unit rents jumped from $540 to $650 over the same period. That means apartment rents are rising twice as fast as house rents.

Greater Melbourne and Greater Brisbane follow a similar pattern, with both cities witnessing a significant increase in unit rents, closing the gap with house rents, says the report, ‘Rising Tide of Unit Rents Closes Gap with Houses in Major Capitals.’

Melbourne’s unit rents rose from $430 to $520, and Brisbane’s from $470 to $550, underscoring the appeal of urban living and the growing demand for units.

“These trends are not just numbers; they tell the story of Australians’ shifting lifestyle aspirations, with a clear tilt towards higher density living options,” says Mike Mortlock, Managing Director of MCG Quantity Surveyors who commissioned the new report.

“This is indicative of a deeper change in the market, influenced by evolving preferences and housing market conditions,” he said.

The MCG Quantity Surveyors report explores a narrowing affordability gap between house and unit rents in Australia’s main state capitals, highlighting significant implications for renters and investors alike.

“The findings of our report reflect a remarkable shift in the rental market dynamics, with unit rents experiencing a surge that is narrowing the affordability gap with houses in three of our major capitals,” says Mr Mortlock.

“The accelerated growth in unit rents compared to houses suggests a strong demand for more affordable, centrally located living options.”

This shift has implications for both renters, who now find the price difference between choosing a unit over a house diminishing, and investors, who are seeing units emerge as an attractive investment proposition.

“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,” advises Mortlock.

For a deep dive into the report which goes into detail on specific suburbs in the three Eastern capitals, CLICK HERE to download it.