Canberra House Rents Rise For Quarter After Woeful Year
30 January 2015 John Thistleton
After the biggest correction in rental prices in at least 16 years, Canberra real estate agents expect 2015 to be a more stable market for renters and investors. Renters vacated over-priced properties throughout 2014 for cheaper options when a wave of new units came on stream, lifting the number of properties on the market to 3800.
The number has come back to 2700. The Independent Property Group forecasts another wave of units coming on stream in 2016 and 2017 as demand for rental property grows steadily. Rental price growth for ACT homes rose 1.1 per cent for the December quarter, one of the best performances in all markets.
But for the year, the territory's rents for units dropped by 7.3 per cent, the biggest fall in Australia, while house rentals fell by 5 per cent, second only to Perth's rental market. RP Data research analyst Cameron Kusher said rental rates across the combined capital cities had remained flat in 2014, which was the most subdued the rental market had been since the mid-2000s. "While rental growth remains slow, rents still increased over the year in most cities with Perth, Darwin and Canberra the exceptions," Mr Kusher said.
In Canberra, Badenoch Real Estate spokesman Symon Badenoch said December's growth came after tenants sought to secure properties before Christmas for the New Year. Mr Badenoch put the year's slump in rental growth down to supply and demand forces. "We had a large supply of apartments built over the last two years, we knew this wave was coming, there was always going to be a correction, once all this supply hit the market," he said. "We have now moved through that, I believe. So during 2014 we had a lot of large complexes being completed and a lot of those have been sold to investors, you then get a large supply to come on. That gives tenants choices, therefore the rents come down from there."
Mr Badenoch expects a stable 2015, because most investors understand the market. "When they understand the market they will advertise [rentals] at current market rate, so when you advertise at market rate, things rent quicker," he said. Tenants would likely find a home and stay there without having to panic too much about the rent going up and having to go somewhere cheaper. "The number of tenants vacating due to rental prices has dropped dramatically with us. The reason they were moving out, they found something cheaper, now owners expectations are matching the market."
Mr Badenoch said rent increases had been issued for the previous 16 years. "Last year was the first where rent increases weren't issued. We've had the correction, 5 per cent, but I would expect that to stabilise now. "Independent Property Group director of property management Norm Honey said he expected rental prices to level off after old stock left on the market had been cleared. "In a couple of years’ time we are going to be back to where we were, I know what we have to release this year through IPG which will have 18 months build time, so 2016/17 will be a big supply year," Mr Honey said.
The Canberra Times; January 8, 2015