Australian capital city rents down 0.3% in August

Residential rent prices in Australia’s capital cities fell by 0.3% in August, taking the median rent to $481 per week, the lowest since November 2014.

It means that over the past year rental rates have fallen by 0.5% and are now 1.4% lower than when they peaked back in May 2015. In contrast, city rental rates increased by 0.7% at this time last year, according to the latest index from CoreLogic.

There is, however, some regional variation and over the past 12 months, rental rates have increased in Melbourne by 2.9%, in Hobart by 6.8% and in Canberra by 2.6% while they are unchanged over the year in Sydney.

But rents are down by 1.1% in Brisbane, by 0.3% in Adelaide, by 9.4% in Perth and by 14.1% in Darwin. Melbourne, Hobart and Canberra have each recorded stronger rental growth, up 2.4%, 6.8% and 2.6% respectively.

Currently, combined capital city rental rates are $484 per week for houses and $466 per week for units.

‘As long as wages growth continues to stagnate, coupled with historically high levels of new dwelling construction and slowing population growth, landlords won’t have much scope to increase rents. On the flipside, renters are now in a much better position to negotiate,’ said CoreLogic research analyst Cameron Kusher.

‘Changing rental market conditions may also spur on repercussions for older stock, particularly units. With new unit supply being built, much of which is located in inner city locations,’ he pointed out.

According to Kusher, there is the potential for a flight of tenant demand towards higher quality tenancy options in newer buildings. It may be more difficult for owners of older units with fewer amenities to compete with better located and facilitated new unit stock, particularly if there is little pricing differential,’ he added.