If you’re in the market to rent, here’s some excellent news. For the first time in at least two decades Australian capital city rental rates have fallen compared to a year earlier.
According to the latest CoreLogic RP Data rental review, capital city rents fell by 0.2% in the year to March, leaving the national average at $486 per week.
Housing rents averaged at $489, ahead of units at $469. In percentage terms, house rents fell by 0.5% over the past 12 months, but unit rents continued to climb, up by 1.5%.
With more houses being rented in Australia than units, the index is weighted towards housing rents, hence the small annual fall recorded.
“We have been tracking the annual change in capital city rents since 1996 and this is the first time we have seen rental rates falling,” said Cameron Kusher, research analyst at CoreLogic RP Data.
“The extra accommodation supply, as a result of the current building boom, along with the recent record high levels of investment purchasing is adding substantial new dwelling supply to the rental market at a time when the rate of population growth is slowing from quarter to quarter.”
Alongside a sharp increase in available rental stock, Kusher suggests slower population growth and record-low wage growth also contributed the decline.
He also points to a number of other factors that suggests price pressures will likely remain non-existent.
“With dwelling approvals recently at record highs, construction activity set to peak over the next 24 months and many new properties still to settle, the rental demand weakness is expected to persist,” says Kusher.
“In all probability, there won’t be much scope for landlords to lift rental rates given current conditions have given greater negotiation opportunities to those in rental situation.”
The table below, supplied by Corelogic RP Data, looks at the change in rents in each capital city over the past month, quarter and year. For investors, it also includes average yields based on property prices and rents, comparing the results to 12 months earlier.