Three-bedroom units face the steepest rental increase in Canberra

Three-bedroom Canberra units earned investors a larger annual rental increase than any other housing type, new data reveals.

The data, released by the Domain Group on Friday, demonstrated Canberra’s rental median prices by housing type.

Quarterly and yearly rental increases were recorded across all housing types after a stagnant five-year period following the global financial crisis.

Domain chief economist Andrew Wilson said larger housing types – three-bedroom units and four-bedroom houses – were rising at a greater rate than smaller properties, which could indicate that the supply of larger rental homes was not meeting demand.

The median rental price for a three-bedroom unit jumped 8.2 per cent to $460, while the four-bedroom house median of $575 was a 6.5 per cent increase from last year’s figure.

“It’s interesting that the higher end of the market seems to be growing the fastest at the moment and it’s the three-bedroom units that have grown the strongest over the year in Canberra,” Dr Wilson said.

Dr Wilson’s research also analysed the proportion of each housing type on the market, which he said may also explain why there was a higher demand for the larger housing types.

Just 16.2 per cent of Canberra’s rental units had three bedrooms. One- and two-bedroom units accounted for most of the stock at 40.1 and 41.6 per cent, respectively.

Three-bedroom homes represented 53 per cent of rental houses, while just 28.7 per cent of houses had four-bedrooms.

Five-bedroom homes accounted for just 28.7 per cent of the market.

“It’s a high proportion of three-bedroom houses and it’s quite interesting that it’s more than half the market,” Dr Wilson said.

“I think maybe that’s an affordability process too, there’s a big difference between the rent on a three-bedroom and four-bedroom house – $575 for a four-bedroom houses versus $450. So it’s 25 per cent higher.”

Dr Wilson said rents were still catching up on 2011 prices. One-bedroom unit rents decreased by 10.5 per cent during the past five years, the largest decrease among all housing types.

Two-bedroom and four-bedroom houses were the only dwellings to experience a modest rental increase during the past five years, at 2.6 and 1.8 per cent, respectively.

“The market is getting back to where it was five years ago and that’s a reflection of how expensive rents were then,” Dr Wilson said.

“They’ve been flat over the last two or three years but over the last year, certainly they’ve grown quite significantly and that’s because the general market has improved.”

Canberra’s overall median rental prices of $400 for units and $475 for houses are among the highest in the country. Only Sydney and Darwin are more expensive.