According to analysis from CoreLogic RP Data, rental rates across the combined capital cities fell by -0.2% in June 2015 and the annual rate of growth continues to slow reaching new record lows.
Across the combined capital cities, rental rates are recorded at $487 per week and they have fallen by -0.2% over the month, are unchanged over the past three months and have increased by 1.1% over the past 12 months. The 1.1% annual rise in capital city rents is the slowest rate of growth on our records which date back to December 1995. The sluggish pace of rental appreciation continues to be attributed to the ongoing boom in dwelling construction across Australia's capital cities accompanied by record high participation in the housing market from investors. A high proportion of the inner city unit development in particular is being targeted by domestic investors and foreign purchasers.
Looking across the individual capital cities, over the past year, Sydney and Hobart have recorded the greatest increases in weekly rents. Over the past three months rents are lower in all cities except for Sydney, Melbourne and Canberra. Sydney and Melbourne are recording relatively stronger rental growth despite a large surge in new supply and high levels of investment purchasing.
Key Rental Statistics across the Capital Cities
Over the three months to June 2015, rental rates for houses are unchanged whilst for units they have barely risen (0.1%). The data points to the fact that more recently the rate of rental growth has started to slow even further. Over the past year house rents have increased by 1.1% while units have recorded a slightly greater 1.4% annual rise. The ongoing slowdown in rental growth is seemingly due to heightened new housing supply and historic high levels of housing investment.
Annual rental growth is currently at its slowest pace on record and is also well below its 10 year average levels. The 10 year annual rate of rental growth is currently higher than growth over the past year across each capital city. Sluggish rental growth is most likely due to surging investment demand, record high levels of new housing construction and a slowing rate of population growth nationally. These factors are creating more rental accommodation and suppressing rental increases.
With rental rates already increasing at their slowest annual rate on record, we envisage that the growth in rental rates will slow even further over the coming months. The pipeline of residential construction activity is at a record high which means people choosing to rent will continue to
have more accommodation choices and owners will have less scope to increase rent.
This means that you get the 'real' valuation of your real estate with no hidden agendas.