Softest conditions on record for capital city rental markets: Cameron Kusher
Dwelling rental growth is now at its lowest level on record according to the first CoreLogic RP Data Rental Review for 2016. Currently the median rent rate is recorded at $443 across the combined capital cities.
CoreLogic RP Data 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 percent highlighting that the slowdown in rental conditions has been sharp over the year.
A combination of factors is affecting the national rental 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.
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.
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.
CoreLogic RP Data analysis shows rents across the combined capitals rose by 0.2 percent 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.
Across the individual capital cities, over the past year:
Rents increased in Sydney (+1.4 percent), Melbourne (+2.1 percent), Hobart (+0.1 percent) and Canberra (+1.8 percent).
Rental rates have fallen over the past year in Brisbane (-0.7 percent), Adelaide (-0.4 percent), Perth (-8.6 percent) and Darwin (-13.4 percent).
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.
Rental Market Update:
Weekly rents across the combined capital city measure increased 0.2 percent over the month of January however they were unchanged over the past 12 months.
Currently, combined capital city rental rates are $487/week for houses and $465/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.
Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him here.
