New data from Domain shows capital city house rents were unchanged at $700 per week over the September quarter, while unit rents rose by 1.5 per cent despite very low levels of rental properties available on the market. The slowdown challenges the long-held relationship between tight rental supply and growth.
Domain's chief residential economist Nicola Powell said the data indicates renters' ability to absorb further increases is limiting rental growth. "There's almost a disconnect now between where vacancy rate sits and what is occurring for rental growth," she told The Business. Although it remains "a landlords' market" in all major capitals, the severe supply shortage isn't translating into increases as tenants hit their ceiling.
Rents in Melbourne, Brisbane, Perth and Adelaide flatlined over the past three months. Housing rents actually fell in Sydney and Canberra by $5 and $10 respectively, erasing gains in June. Only Darwin and Hobart bucked the trend, recording rises of 5.3 per cent and 1 per cent respectively for houses. The national vacancy rate rose by 0.1 percentage points to 1 per cent, still much tighter than a year ago.
Independent property economist Cameron Kusher said renters are making trade-offs to survive. "Because rents have increased so much over the last few years, what people are doing is they're renting in a less ideal location," he said. Other compromises include share housing or adult children staying at home longer.
Separately, One Nation released modelling on Wednesday for its migration plan, claiming it could save Australian renters almost $3,000 a year. The party has pledged to cut 750,000 temporary visas over three years if elected, which it says could reduce rental inflation by 6.5 per cent.