Residential rents flat in Australian capital cities over last 12 months
| Residential rents in Australian capital cities were flat in 2015 and growth is now at its lowest level on record according to the latest rental index.Rents increased by 0.2% in January 2016. The only capital cities to see a rise in rents over the month were Sydney, Melbourne, Adelaide, Hobart and Canberra, elsewhere rents dropped, the CoreLogic rental index shows.
Currently the median rent rate is recorded at $443 across the capital cities with a combination of factors affecting the market. ‘Among these is a higher level or rental stock resulting in greater options for renters, a slowdown in population growth, higher than normal investment activity and stagnant wage growth,’ said the firm’s research analyst Cameron Kusher.
‘More rental stock at a time when demand is easing due to slowing population growth, and little wage growth for renters, has resulted in flat rental growth conditions over the past year,’ he explained.
‘For renters there is a lot more accommodation options in the market while simultaneously, landlords are now required to respond to a more competitive environment which, in many cases means keeping rents steady or in some areas reducing rents in order to keep a tenant,’ he added.
He also pointed out that CoreLogic has tracked annual rental changes since 1996 and over that time, rental growth conditions have never been weaker. At the same time last year rental rates had increased by 1.7% highlighting that the slowdown in rental conditions has been sharp over the year.
A breakdown of the figures shows that rents increased in the last year by 1.4% in Sydney, by 2.1% in Melbourne, by 0.1% in Hobart and by 1.8% in Canberra. They fell by 0.7% in Brisbane, by 0.4% in Adelaide, by 8.6% in Perth and by 13.4% in Darwin.
Across every capital city except Canberra the rate of annual rental growth or decline is currently lower than it was a year ago indicating that the weaker rental market conditions are prevalent across most capital cities.
Weekly rents across the combined capital city measure increased 0.2% over the month of January however they were unchanged over the past 12 months and currently, combined capital city rental rates are $487per week for houses and $465 per week for units.
‘It is possible that over the coming months, rental rates could begin to fall on an annual basis due to additional new rental supply entering the market,’ added Kusher.