Rents dropping in most Australian cities

With the exception of 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 per cent drop.

According to research analyst Cameron Kusher, 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.

“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,” Kusher says. “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, Kusher believes there’s 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 says.

Rental index results as at August 31, 2016

Over the past 12 months, rental rates have increased in Melbourne, Hobart and Canberra. Rental rates are unchanged over the year in Sydney and have fallen in Brisbane, Adelaide, Perth and Darwin.

Melbourne, Hobart and Canberra have each recorded stronger rental growth over the past year compared to the previous year.



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