28 Oct 2013

Rents fall for first time in 15 years

Canberra's runaway residential rental market has cooled for the first time since the recession of the 1990s, according to official federal government figures.

The city's 15-year run of rising rents for houses and apartments has ended with the Australian Bureau of Statistics showing rents fell in the September quarter for the first time since the dark days of the capital's mid-1990s recession.

A leading economist said the cool-off is the result of an oversupply of houses and apartments and is bad news for the residential building sector, seen as a lifeline for the local economy as the federal public service contracts.

Anecdotal evidence now has landlords offering rent-free periods as sweeteners and reducing asking rents as they vie to lure prospective tenants to their properties and that the arduous process of finding a home in the capital, familiar to a generation of renters, is getting easier.

The ABS's quarterly consumer price index bulletin for the September quarter shows that rents fell in the three months to September 30 by 0.1 per cent.

The full year data holds little more comfort for Canberra landlords, showing rental growth of about 1.7 per cent, less than half the national trend.

But economist Ben Phillips, of the National Centre for Social and Economic Modelling at the University of Canberra, said the small decline in rents in the September quarter is very significant.

''Rents in Canberra dropped for the first time in 15 years on the back of an oversupplied ACT housing market and an uncertain ACT economy,'' Mr Phillips said.

''In spite of relatively strong population growth, the ACT has experienced a housing construction boom, particularly in apartments, over the past four years in excess of what is required.

''The risk for the building sector is that an expected natural downturn, after several years of strong building, will be exacerbated as public service cuts hit Canberra.''

Despite the risk to the vital housing sector and the potential hit to Canberra landlords, Mr Phillips said the news will be welcomed by the ACT's long-suffering residential renters and even prospective first home buyers.

''The upside would be that a weak ACT property market may provide some relief to renters who currently face the highest median rents of all capital cities in the nation,'' he said.

''A silver lining for first home buyers may be that the weak ACT property market could translate into more affordable house prices.

''Mildly more affordable house prices and rents would be of small comfort to those impacted by public service job losses.''

The above information has been sourced from ‘The Canberra Times’ 28/10/13




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