Rental markets freeze over winter

By www.brokernews.com.au By Kevin Eddy, 8 October 2010

Rental growth in both city and regional markets was flat during the September quarter, according to a new report.

Weekly rental rates have remained steady over the September quarter, said RP Data senior analyst Cameron Kusher, with growth over the last 12 months sitting at 2.9%. This, said Kusher, is still well below historical averages of around 7%

Across the capital cities, houses are most expensive to rent in Darwin, with a median advertised weekly rent of $520. Canberra is the second most expensive city with rents of $495pw, followed by Sydney at $450pw. The most affordable capital city in which to rent a houses is Adelaide ($320pw) followed by Hobart ($325pw).

Kusher attributed the slowdown in growth to the RBA’s aggressive cuts to official interest rates as the GFC hit and the introduction of the First Home Owner’s Grant Boost.

"Both initiatives, coupled with softening property values during 2008 and consistent growth in rental rates during recent years, resulted in a significant boost to affordability for first-time buyers," he said. "As a result, first home buyer activity was at its highest level on record during 2009. With first-time buyers generally coming from the rental market, it’s no surprise to see that the rate of rental growth had slowed so markedly."

Kusher also reported that rents have started to show signs that they are now nudging slightly higher in selected areas, signalling that rental growth may be in recovery.