House renters in Canberra continue to pay the equal highest rent in the nation.
Domain’s latest State of the Market Rental Report for September quarter shows the median weekly asking rents for houses remains unchanged in Canberra over the quarter at $550.
Canberra weekly asking rent for houses is on par with those in Sydney, with both cities paying the equal highest house rents across the country. However, rents in Sydney have experienced no growth over the past 12 months while Canberra rents have jumped 8.4 per cent.
“It’s certainly possible Canberra house rents will surpass Sydney, particularly if you look at the trend of slowing rental growth in Sydney,” said Domain senior research analyst Dr Nicola Powell.
“But it needs to be put into perspective – the type of house you would rent in Sydney for $550 would be very different to Canberra. For example, the house in Canberra would likely be larger and in closer proximity to the CBD, relative to Sydney.”
Rents for units in Canberra have plateaued over the quarter at $450, but this represents a 7.1 per cent jump year-on-year. Hobart was the only capital city to experience a higher rate of growth.
Dr Powell said there were a number of factors pushing Canberra’s rents higher including tightening stock levels and, increasing rates and land taxes.
“In Canberra, advertised supply levels continue to fall and what we are seeing for houses is it’s hit a five-year low in terms of the number of houses advertised for rent over the September quarter; and for units, it’s at a two-year low,” she said.
Latest SQM research data shows Canberra’s vacancy rate for rentals is 0.7 per cent.
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Dr Powell also pointed to the rise of short-term rentals in Canberra, pointing to recent data that showed there was an increased demand for short-term rental accommodation in Canberra.
“Due to increased tourism levels in the ACT, we are seeing investors opt for higher-yielding options,” she said.
Real estate agent Ash Costello, of home.byholly, said one of her current apartment sales listings in New Acton’s Nishi building returns more than $5000 per month through Airbnb.
“Investors are seeing gross returns substantially higher than traditional rent,” she said.
Despite this, rental yield for units in the nation’s capital are at an all-time high of 5.95 per cent. Yield for houses sits at 4.33 per cent.
In the seven years Kristen Dillon has rented in Canberra, she has seen rents “skyrocket”.
She has lived in four properties during that time and the weekly asking rent for the townhouse she lives in now is $150 more than for her first house – both are located in the Gungahlin region and have three bedrooms and two bathrooms.
Ms Dillon lives in the home with her partner and they are trying to save to buy a property on the outskirts of Canberra. The couple also have a housemate.
“The money [our housemate] pays is what we can put away each week,” she said.
“We did look at moving somewhere cheaper, to put aside extra money to buy a house, but just having a look at the market and the costs associated with moving, I don’t know how people can afford it, especially if you are by yourself.”
Photo: Dion Georgopoulos
Despite the costs, Ms Dillon said her landlords are easygoing, particularly as they allow her to keep two cats – Kitty and Simba.
“I know people that are being forced to give up their pets to live somewhere and that’s not fair at all,” she said.
Better Renting director Joel Dignam said, in the current market, landlords are in a very strong position.
“With low vacancy rates, they can really exploit the shortage of properties to ask whatever rental prices they want, but that really creates intense competition for people who are renting,” he said.
“It would be good to see an increase in supply as more properties would create greater competition between investors.”
Better Renting has recently joined in an alliance with Tenants’ Union ACT and Unions ACT to call on the ACT government to reform the ACT Residential Tenancies Act. Among other things, they are campaigning for changes against rent increases.
“At the moment, it’s always incumbent on the tenant if they wish to appeal a rent increase, but if the tenant doesn’t appeal the rent increase takes effect,” he said.
“We are campaigning that, above a certain threshold the landlord has to go to ACT Civil and Administrative Tribunal to get an increase approved because they are in a far more powerful position and have a lot less at stake.”