Australian rental prices are dropping

Edited by Nelly T.

Compared to a year earlier Australian capital city rental rates have dropped for the first time in at least two decades.

Capital rents have fallen by 0.2% in the year to March according to the latest CoreLogic RP Data leaving the national average at $486 per week.

Housing rents have fallen by 0.5% averaging at about $489 but still ahead of unit rents, which continue to climb up by 1.5% and averaging at $469.

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,” research analyst at CoreLogic RP Data, Cameron Kusher said.

“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.”

Kusher suggests that record-low wage growth and slower population growth as well as a sharp increase in available rental stock could be some of the reasons why the numbers have declined.

He continues to call attention to other various factors that imply 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,” Kusher said.

“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.”