According to analysis from CoreLogic RP Data, rental rates across the combined capital cities fell by -0.3% in July 2015 and the annual rate of growth continues to slow, reaching a new record low of 0.9%.
Across the combined capital cities, dwelling rental rates have fallen by -0.3% over the month, are up by 0.3% over the first seven months of the year and have increased by just 0.9% over the past 12 months. The 0.9% annual rise in capital city rents is the slowest rate of growth on record, with data going 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.
Over the past year, Sydney has recorded the greatest increases in weekly rents. Over the past three months rents are lower in all cities except for Melbourne.
Rental Index Results as at 31 July 2015
CHANGE IN RENTS
Over the three months to July 2015, rental rates for houses are down 0.5% whilst for units they have barely risen (0.2%). 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 0.7% while units have recorded a slightly greater 1.6% annual rise. The ongoing slowdown in rental growth is likely 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 could slow even further over the coming months. The pipeline of residential construction activity as well as investment demand 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.
KEY RENTAL STATISTICS ACROSS THE CAPITAL CITIES
|Year to Date||0.7%||1.3%||0.1%||-3.4%||-6.8%||1.0%|
|Year on Year||2.3%||2.1%||1.3%||-5.5%||-9.5%||0.6%|
|Year to Date||1.6%||1.4%||-1.3%||-5.0%||-5.1%||0.2%|
|Year on Year||2.9%||1.8%||-0.2%||-7.2%||-8.1%||-0.8%|
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