Excluding Melbourne, Darwin and Canberra, rental rates across Australia’s combined capital cities continued to drop in August according to the latest CoreLogic Rent Review.
Interestingly, the August results mirrored the results for July, with both months now sharing a -0.3% drop.
Weaker rental market conditions are expected to continue over the coming months as overall housing supply grows.
Combined capital city median weekly rents are sitting at $481 per week; the lowest rate since November 2014.
Rental Index results as at August 31, 2016
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, we saw capital city rental rates increase by 0.7% at this time last year.
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.
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.
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.
Over the past 12 months, rental rates have increased in Melbourne (+2.9%), Hobart (+6.8%) and Canberra (+2.6%).
Rental rates are unchanged over the year in Sydney and have fallen in Brisbane (-1.1%), Adelaide (-0.3%), Perth (-9.4%) and Darwin (-14.1%).
Melbourne, Hobart and Canberra have each recorded stronger rental growth over the past year compared to the previous year.
August Rent Review Snapshot:
- Weekly rents across the combined capital cities fell by -0.3% in August 2016 and are now -0.5% lower over the past year;
- Melbourne (2.4%), Hobart (6.8%) and Canberra (2.6%) are the only cities in which rental rates have increased over the past year while Sydney rents are unchanged;
- Large rental falls in Perth (-9.4%) and Darwin (-14.1%) have pulled the combined capital average lower, with rents also falling in Brisbane (-1.1%) and Adelaide (-0.3%) over the year;
- Currently, combined capital city rental rates are $484/week for houses and $466/week for units.