At TOOP+TOOP December marked the peak of the busiest period in the rental market. We experienced a significant seasonal rise in tenant activity, which had a direct and positive impact on the performance of our rental listings, reducing the average days on market substantially. Properties being leased 25% faster compared to the previous quarter, reflecting the competitive nature of marker during this period.

The momentum has carried into the new year, with over 193 rental applications received in the first 20 days of January. This strong activity indicates that the seasonal upswing is likely to persist throughout the summer months.

Nationally, rental affordability challenges persist with the rental index showing a 4.8% annual increase as of December, down from the 8.1% rise recorded the previous year. While rent increases paused during the holiday period, tenant activity surged as many began searching for new homes, setting the stage for moderate rental growth as we move into 2025.

Key market trends:

At a local level, demand for properties in the $500-650 price range remained robust throughout December, particularly in Adelaide’s western suburbs. Meanwhile, properties in the Adelaide Hills region, particularly in Mount Barker and Strathalbyn saw a sharp increase in popularity amongst renters. Properties in these areas attracted 16 times more views than the market average and were leased 60% faster than those listed by other agencies.

Opportunities for investors:

The increased demand for rentals in the Adelaide Hills region is a trend that is expected to continue in the long-term, as rising living costs and high metro rents are pushing tenants to seek more affordable options. With a rental yield averaging 4.6% for houses compared to an average 3.7% in metro areas and relatively softer property prices, the Adelaide Hills offers a strong potential for investors seeking both strong returns and capital growth.

Looking ahead:

As the warmer months progress, tenant activity is anticipated to sustain its momentum. However, a recent report from CoreLogic suggests that beyond the seasonal uptick, factors such as the normalisation of net overseas migration and increasing household sizes may temper demand. As a result, rental growth is likely to continue to slow in 2025.