Rents are higher than a year ago across almost all areas of regional NSW, led by a spike in smaller towns as priced-out tenants look further afield.
A strong agricultural season and an inflow of new residents in some towns have also led to demand for rentals, while there are few available homes.
The median asking rent for a house in regional NSW reached $640 a week in the September quarter, 4.9 per cent or $30 a week higher than a year ago, the latest Domain Rent Report shows.
The steepest rise was in the Berrigan Shire in the Riverina region, west of Albury, where asking rents rose 18.5 per cent over the past year to a median $480.
It was followed by Bellingen near Coffs Harbour, up 18.2 per cent in a year to $650 a week.
Rents also jumped in the Liverpool Plains Shire outside Tamworth (up 17.5 per cent to $470 a week) and the Moree Plains Shire (up 15.4 per cent to $450 a week).
But Domain chief residential economist Dr Nicola Powell noted the pace of rent growth had slowed, and held steady across regional NSW over the past three months to September, a seasonally weaker time for the rental market ahead of summer.
“Affordability constraints are becoming a lot more pressing,” she said. “When you look at rents they’ve risen substantially over the past five years and that just leaves less room for further rapid increases.”
She said rental markets in many areas were affected by factors such as housing supply or the strength of the local economy. Some were agricultural areas where demand from extra workers placed pressure on a small housing stock, while others were lifestyle areas which still attracted retirees or sea-changes.
KPMG urban economist Terry Rawnsley said some regional towns experienced a ripple effect from rent rises in nearby towns prompting tenants to look further afield.
Tenants priced out of Byron Bay were moving to areas such as Lismore for cheaper rent, or from the Gold Coast to the Tweed Shire, he said, adding some small towns also had new workers arrive from overseas to fill jobs in agriculture and healthcare.
“You’ve got mismatch of places that need workers to come in, but they don’t have a lot of affordable housing or any housing to accommodate those workers, and hence you’ve got this spike up in rents,” he said.
Increasing housing supply in these regions could help – in some small towns only a few extra homes could make a difference, he noted.
In Berrigan, Karna Kilburn Real Estate director Karna Kilburn said plentiful available work in the transport and agriculture sectors was attracting people to the area and the town which is centrally located and quiet, with shops and an independent supermarket.
“Rentals are very hard to find in Berrigan,” she said, adding most home purchasers in the area were owner-occupiers rather than investors who had been deterred by changes to state rental laws such as the end to no-grounds evictions.
“The rents keep going up in Berrigan, but I don’t believe they’ll go much higher than what they are.”
She had one landlord recently decide to sell the eight houses, after tiring of the ongoing maintenance required.
“Those eight houses I sold, there wasn’t one investor that bought one, they were all people that wanted to come and live in Berrigan,” she said.
Further north, some investors were also stepping back in Bellingen, Cardow + Partners principal Nathan Cardow said.
“Since the budget, we haven’t sold one block of land to a landlord wanting to build a rental house. Not one,” he said.
Despite high construction costs, there were still some rentals being built before the federal budget, but not since, he said.
New residents, he said, were arriving from the Byron Shire to find a relatively cheaper place to live, along with some sea-changers from Sydney and Brisbane.
He had three rentals available: a centrally located two-bedroom unit that received an application within a couple of days of being advertised, a three-bedroom house that has been available for a week and received four applications, and a four-bedroom house that has been available for 30 days without a tenant being approved – albeit the home is out of town in Boambee East, between Bellingen and Coffs Harbour.
“It does go in cycles,” he said, and sometimes he may have six or eight rentals available. “We just haven’t got the rentals now. And we’ve probably got less now because a lot of landlords, if it gets too hard, they’ll just sell it.”
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