This shift in position is attributed to Adelaide’s more moderate rental growth rate of 2.5% over the quarter, in contrast to Melbourne’s higher increase of 3.9%. As a result, the average weekly rent for a dwelling in Adelaide is $549, slightly below Melbourne’s $551 per week.

On the other hand, Hobart has experienced a decline in rents, with a negative growth rate of -1%, bringing the average weekly rent to $552. This suggests that if the current trend continues, Hobart is well-positioned to overtake Adelaide as the most affordable city to rent in Australia.

The decrease in Hobart rents reflects a broader trend in the Australian rental market, where we are seeing the rate of growth is starting to ease. In June, the growth rate dropped to 2.5%, down from its peak of 3.5% in May.

This suggests to us that an increasing number of tenants are reaching their affordability ceiling. This pressure has also translated to an increase in the average household size, with more renters opting for share houses to help alleviate higher rents, and many young adults are staying at home for longer or moving back in with family members.

Although the softening rental conditions provides tenants with some relief, the rental growth rate across the country remains significantly higher than long term averages, highlighting the persistent challenges in the Australian rental market.