Weekly rents increased by a mere 0.2% at a combined capital city level in March.
Despite the monthly increase in rents, rental rates across the combined capital cities are -0.2% lower over the past year.
Over the year, Melbourne recorded the biggest increase in rental rates at 2.0 per cent followed by Sydney at 1.4 per cent, Canberra 1.2 per cent and Hobart 0.3 per cent.
On the flipside, the cities to see a drop in rents included Darwin -11.5%, Perth -8.4 per cent, Adelaide -1.0%, and Brisbane with a -0.7% drop.
In the March Rental Review, CoreLogic RP Data confirmed that the combined capital city house rents were recorded at $489 per week in March 2016 while unit rents were $469 per week.
Over the past month, house rents have increased by 0.1% and unit rents by 0.4% and over the past three months, house rents rose 0.5% compared to a 0.9% rise in unit rents.
The March results show that recent rental increases are likely to be seasonal which is further highlighted by the fact rents are lower over the year.
Over the past 12 months, house rents were -0.5% lower and unit rents increased by 1.5%.
It is important to note that a much higher proportion of total unit stock is rented compared to housing stock.
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.
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.
Furthermore, wages are increasing at their slowest annual pace.
The results highlight a swift easing in rental market conditions over the past year.
We’ve attributed this ease to a variety of influences such as falling real wages, excess rental supply in certain areas and lower rates of population growth which have impacted on demand for rental accommodation.
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.
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.
While rental rates remain at record highs in Sydney and Melbourne, rents are lower than their previous peaks in all remaining capital cities.
The decline in dwelling rents from peaks is recorded at: -0.9% in Brisbane, -1.2% in Adelaide, -12.8% in Perth, -0.1% in Hobart, -15.6% in Darwin and -7.4% in Canberra.