Apartment rents are set to surge over the next few years
Key takeaways
Median apartment rents across Australian capitals are forecast to rise 24% between 2025 and 2030.
By 2030, 92% of 2-bed apartments will cost more than $700/week, with one-third topping $1,000/week.
Renters will continue to face affordability challenges as demand heavily outstrips supply.
Median apartment rents are likely to grow by 24% between 2025 and 2030, across Australian capital cities, according to the latest report by International Property Consultancy, CBRE.
By 2030, 92% of 2-bed apartments are forecast to have rents exceeding $700/week (33% exceeding $1000/week).
CBRE expect that capital city vacancy rates will fall further to 1.1% by 2030 from 1.8% in 2025.
These tight conditions will endure as vacancy stays at around half of the previous decade’s average of 2.5%.
The report highlights how newly built apartments trade at a premium to older vintages.
For example, newly built two-bedroom apartments are at a 30% price premium to older apartments.
High construction costs and better amenities have also put upward pressure on rents for new builds.
Over the next 10 years, demand for housing is expected to benefit from a triple boost: rising population (+4.1 million), rising jobs (+2.8 million), and rising income (+$39k).
CBRE estimates around $960 billion of additional income in the system to support mortgage, rent, and other living expenses.
According to the report, after accounting for on-costs such as municipal rates and strata fees, it is cheaper to rent in all precincts across Australia.
Monthly rents are 30-40% cheaper than alternative buy options at current prices.
CBRE forecasts the future supply of apartments is likely to hover around 60,000 p.a. over 2025-30.
However, Australia’s projected population growth necessitates an apartment supply of approximately 75,000 annually to prevent further declines in vacancy rates.
- Sydney: Apartment delivery will average 11,700 p.a. over 2025-30, well below 30,000 p.a. demand for total housing stock. Vacancy rates are set to fall from 2.0% to 1.2%.
- Melbourne: Apartment delivery to average 9,000 p.a. over 2025-30, nearly 25% below Sydney. Demand for housing stock (apartments and communities) is expected to average 38,000 units per annum over the next five years. This should continue to drive down city-wide vacancy from 2.1% to 1.4%.
- Brisbane: Apartment delivery to average 4,600 per annum over 2025-2030. Demand for housing stock (apartments and communities) is likely to average 16,000 p.a., which will drive down city-wide vacancy from 1.1% to 0.7%.
