The annual inflation rate has dropped to 6 per cent in the June 2023 quarter, compared to the 7 per cent rate from last quarter.
However, services annual inflation has recorded its largest annual rise since 2001, as driven by increase in rent prices, restaurant meals, holiday travel and insurance.
Master Builders Australia CEO Denita Wawn states that the rental market has passed another grim milestone and displays no signs of easing.
“Even though the overall inflation rate has improved, services inflation has worsened. Services are labour intensive and the shortage of workers in our economy is one of the main sources of price pressures here.
“Australia’s ability to attract the workers we need right now is being hampered by the worsening rental costs evidenced in the latest figures and the unfavourable situation with housing affordability.
“Rents are continuing to accelerate because landlords’ mortgage interest costs have risen so substantially over the past 14 months, and we simply aren’t building enough new higher-density homes to meet rental demand.
“Supply of higher-density homes needs to be resuscitated urgently. Doing so will require action to reduce the costs of creating new homes, bolstering investor demand, and making the risks to builders and developers a little less confronting,” said Wawn.
National rent values rose 2.5 per cent in the June quarter, which was in line with the 2.5 per cent rise recorded over the March quarter, but was lower compared to the 2.8 per cent increase at the end of May.
Rental growth in Australia remains well above average despite the decrease in pace of national rental growth.
With the exception of regional Tasmania, rents across each regional market rose over the quarter.
Perth recorded the strongest quarterly rise in unit rents with an increase of 4.6 per cent and Melbourne experienced the largest increase in house rents with an increase of 3.5 per cent.
At present, Sydney remains as the most expensive rental capital in Australia across all property types with average rates of $733 per week for dwelling renting, $778 per week for house renting and $688 for unit renting.