Nicola Powell: Rental market demand steady

During February the volume of rental stock hitting the market eased while demand remained steady. Unfortunately for renters the balance is still in the favour of investors.

According to the latest Allhomes data, demand rose marginally by 1.7 per cent, to 1559 properties leased throughout the month – 26 additional properties leased compared to February 2015. However, it is the dwindling supply of new properties listed that has helped to keep median rent prices steady.

Supply fell 17.7 per cent over the year to 1134 properties listed throughout the month. This is 244 fewer rental properties listed compared to February 2015.

The performance over the February quarter further highlights the changing market conditions.

Supply fell by a staggering 21.8 per cent to 3764 listed on allhomes.com.au over the February quarter, just over 1000 fewer new listings compared to the February 2015 quarter. Tougher investor lending conditions may have negatively impacted investment activity and in turn rental stock levels.

The level of demand has remained consistent, falling by 2.3 per cent over the February 2016 quarter to 4549 properties leased, only 109 fewer compared to the February 2015 quarter.

A lower volume of stock has meant, for the right property, prospective tenants are competing. Over the year, this has helped to shave 11 days off the time taken to lease.

Properties spent on average 31 days on the market during February. The significant fall reflects the lower levels of stock but also the busiest time in the rental calendar.

From a market swamped in supply, the tumbling volume of new listings has helped to create some stability in the market.

Previously investors did respond by dropping the median asking rent. Tenants experienced a couple of years of falling rental prices, but as the supply and demand balance alters it has put pressure on median prices.

Median achieved rent for the ACT and Queanbeyan currently sits at $420 a week. Prices remain steady across the month but investors are pocketing an additional $10 a week compared to last year.

Price hikes have occurred for all property types. Across the year, the median achieved rent for houses rose by $20 a week to $490 and apartments rose by $10 a week to $390.

It is a particularly busy time in the rental calendar, a time of heightened competition between tenants, another factor helping to push rental prices upwards.