Sydney and Melbourne units are almost as expensive to rent as houses, according to the latest from Domain.
Sydney's median apartment rent rose $20 over the March quarter to a record $520, according to Domain Group's March Quarter Rental Report. Median rents for houses remained steady over the quarter at $530.
The solid growth in rents suggests the recent apartment construction boom has not yet reached oversupply, at least for the time being. Domain Group chief economist, Andrew Wilson, said the Sydney apartment market was 'chronically undersupplied', and that rents would continue to increase.
The picture was similar in Melbourne, with the median rent for apartments jumping 2.7% during the quarter to $380, also a record high. Median house prices held steady at $400 a week. Melbourne unit rents soared 4.1% over the year, the highest growth of all capital cities.
Despite concerns about oversupply in Melbourne's city centre, median rents in the inner-city region rose 4.7% over the year to $450. Across the city, vacancy rates tightened from 2.6% in February to 2.4% in March.
Wilson said demand for unit rentals in Melbourne was being driven by strong levels of migration to the city. A decline in the number of investors in the Melbourne real estate market could also be having an impact, he said.
"We do have the bulk of apartments yet to come onto the market," said Wilson, "and that obviously continues to raise questions about having more unit oversupply. But at this point in time, with the building boom now clearly over, rather than seeing an oversupply of units, we're seeing an undersupply."
The news was better for renters in Perth, where the median rent for units fell 9.1% over the year to $350. Rents were steady for the quarter, after seven consecutive quarterly falls. Median house rents fell 2.4% over the quarter to $400, down 11.1% for the year.