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House rents flat in June quarter

  • 07-07-10

A private analysis shows some relief for renters over recent months, with house rents remaining flat over the June quarter.

The median rent for apartments grew at a relatively modest 1.4 per cent in the quarter, according to RP Data's figures, while rents for houses showed no growth nationally.

The report reveals an annual growth rate of 2.9 per cent in rents for both houses and units, which RP Data's research analyst Cameron Kusher says is well below the average of 7 or 8 per cent per annum over the last five years.

He says the weakness in rental growth has been widespread outside Sydney and Canberra.

"Sydney saw a quarterly increase in house rents of 2.3 per cent and Canberra saw a quarterly increase of 2.1 per cent for houses. Then, moving to the units market, Sydney rents increased 2.4 per cent and Canberra rents increased 3.8 per cent," he said.

"But outside of Sydney and Canberra, the quarterly change in rental rates has been fairly subdued in most cities and a number of cities have actually seen falls."

Melbourne (-1.4 per cent) and Hobart (-1.5 per cent) had falling rents, while Brisbane, Adelaide, Perth and Darwin saw rents remain steady over the quarter.

Canberra and Adelaide had the highest rental growth over the past financial year at 6.7 per cent, while Sydney, Melbourne and Perth had no growth in rents.

Mr Kusher says the effect of first home buyer stimulus and low interest rates caused a lot of people to leave the rental market and buy a house.

"Coming out of last year we saw the greatest number of first-home buyers in history so obviously that takes a lot of pressure out of that rental market," he said.

"But now that we're seeing higher interest rates, lower levels of property value growth in the residential property market, we're certainly expecting that rental rates will start to creep back up in the second half of 2010."

However, he says the period of low rent rises is unlikely to last long, with higher interest rates deterring first home buyers in 2010.

"During the second-half of 2010 we expect that we'll start to see more upwards pressure on rental rates," he explained.

"Particularly given that population growth into Australia is still so strong and the fact that the higher interest rate environment is making it harder for those first-time buyers to get into the market, and obviously they have to live somewhere, and they're going to be living in rental property."

By online business reporter Michael Janda and staff | | 7th July 2010 

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