After declining for many weeks, rental demand rose last week, with increases in most states.
The REA Insights Rental Demand Index, which measures high-intent rental activity on realestate.com.au, increased by 1.5 per cent last week.
This increase in rental demand has not been seen in previous years at this time. Given the challenged conditions for landlords, it may indicate that renters are getting an earlier start on their search for properties upon the expiry of their leases early in 2021.
Both houses and units recorded a rise in rental demand over the week, however, the increase for units (2.2%) was much greater than that for houses (0.8%).
Only Tasmania (-1.2%), Northern Territory (-1.2%) and Australian Capital Territory (-6.8%) recorded falls in rental demand over the week, with the largest increases recorded in South Australia (3.8%) and Queensland (3.3%).
Although rental demand increased over the week, it was -24.2 per cent lower than its historic peak last week.
New South Wales (-33.9%) and Western Australia (-31.2%) have recorded the largest overall falls in demand from the peak. Demand is closest to its peak in Australian Capital Territory (-9.9%) and Tasmania (-16.1%).
A year-on-year comparison highlights just how much stronger rental demand is than a year ago – up 21.3 per cent for all dwellings, with a 11.1 per cent rise for houses and 33 per cent increase for units.
Western Australia was the only state in which rental demand is lower than a year ago (-9.6%), with demand only marginally higher in Northern Territory (4.1%), while there have been large increases in Australian Capital Territory (32.7%) and Victoria (31.5%).
Interestingly, South Australia is the only state in which the year-on-year change in demand for rental properties is trending higher, with the trend flat to falling elsewhere.
Demand remains strong for rental properties but as mentioned previously, it is likely being driven by landlords and renters continuing to closely monitor the market for availability and price adjustments.
It will be interesting to see whether what has happened last week is an aberration or if demand for rental properties spikes much earlier than usual this cycle.
No matter what happens, I expect that the Index will remain elevated relative to the previous year.