Jun 15, 2017
Canberra remains a tough city for renters despite a recent surge in construction.
Domain Group’s Autumn Rent Report shows house rentals have jumped 6.4 per cent in the past 12 months, while unit prices rose 5 per cent.
Combined with a tight rental vacancy rate of 1.2 per cent “it’s the stuff that nightmares are made of for tenants”, according to Domain Group chief economist Andrew Wilson.
He said Canberra was “starting to look a lot like the Sydney rental market, particularly for houses”.
Canberra’s median weekly rental price was $500 for houses and $420 for units.
Houses and units cost $550 and $540 to lease in Sydney.
Melbourne’s median weekly rental price was $420 for houses and $400 for units.
Median sale prices in the nation’s capital still lag behind the two larger cities.
Domain Group data scientist Nicola Powell said Canberra’s transient population contributed to the high rental costs.
“We do have such a strong demand for rental properties in Canberra,” Dr Powell said.
“Even though we’ve seen that building boom for units and apartments, we are still seeing that demand.”
While median unit rentals increased by 5 per cent over the past year, they were down 4.5 per cent over the past five years.
Dr Powell attributes this to a surge in supply, which is now tapering off.
“We did see real negative pressure on price from that unit and apartment stock,” Dr Powell says.
“New stock is now starting to ease and it’s why we’re seeing that price growth. I do think we’ll continue to see the rental market tighten.”
Dr Powell said rising rents and stagnant wages have put additional pressure on first home buyers.
“They’re trying to save while outgoings are continuously rising and rent is a huge chunk of that,” she said.
It’s even bleaker for lifelong renters, Dr Wilson said.
“[The rental surge] is a big ask for those sitting on incomes which are typically at the lower end of the spectrum,” Dr Wilson said.
“It’s sobering news for Canberra and there’s no real sign of relief.”
Gross yields remained strong at 4.5 per cent for houses and 5.7 per cent for units.
“Given very tight vacancy rates and given strong rent growth, you’d think [Canberra] would be a pretty fair target for investors, particularly given those yields that indicate units are undervalued,” Dr Wilson said.
The most expensive suburbs for rental properties were Yarralumla for houses ($900) and Deakin for units ($580).
The suburb of Belconnen offered the most affordable houses ($395), while Hawker had the most affordable units ($310).
Canberra’s most expensive suburbs for rental properties
Yarralumla – $900
Campbell – $780
Deakin – $773
Red Hill – $770
Garran – $750
Deakin – $580
City – $553
Yarralumla – $550
Garran – $540
Kingston – $530
Canberra’s most affordable suburbs for rental properties
Belconnen – $395
Macgregor – $430
Ngunnawal – $430
Spence – $430
Phillip – $433
Hawker – $310
Mawson – $320
Holt – $330
Lyons – $330
Campbell – $340
Source : All Homes