Rent in Australian capital cities have fallen for the first time in 20 years, giving an indication of the patchy nature of the market.
Over the last 12 months capital city rental prices have fallen by 0.2 per cent across the country according to CoreLogic RP Data’s Rental Review.
Dragging the figures down were steep drops in resource-dependent towns, with Darwin rents falling 11.5 per cent and Perth’s plummeting by 8.4 per cent over the last year.
In the hotter rental spots of Sydney and Melbourne rents were just trickling along, with Melbourne prices rising at 2 per cent and Sydney just 1.4 per cent.
CoreLogic RP Data’s Cameron Kusher told the ABC that slightly stronger rental figures in the month of March were probably just seasonal factors and he expected rental rices to continue to struggle.
“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,” he 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 situations,” said Mr Kusher.
Some economists see it differently however, with plenty expecting rents to keep rising.
Domain chief economist Dr Andrew Wilson is one such person and he also spoke to the ABC.
“Despite the recent influx of home building, we can expect to see upward pressure on both house and unit rents in most capital cities continuing in the foreseeable future,” he said.
“It has been a positive quarter for investors in Melbourne with unit rents rising to record levels and vacancy rates falling, despite an unprecedented new apartment boom.”
As for investors, even though rents may be rising in some areas, returns aren’t showing strong results.
In Sydney, Australia’s most expensive market, rental yields have fallen from 3.6 to 3.4 per cent and Melbourne isn’t far behind, with yields dropping from 3.3 to 3.1 per cent.