Canberra tenants face the nation's sharpest rise in rent

Renters in the nation’s capital have been hit with a steeper hike in living costs this year than their interstate peers, a new report has found.

According to the CoreLogic April Rent Review, released on Tuesday, Canberra in the only capital city where rental growth is accelerating.

Rental prices in the territory rose 2.5 per cent over the past 12 months.

Canberra was among five capital cities to experience a rise in rental rates. Melbourne had the second largest increase with a rise of 1.7 per cent, followed by Sydney at 1.4 per cent.

CoreLogic research analyst Cameron Kusher said the capital city rental rates across the country averaged a 0.2 per cent drop.

He said significant declines in Darwin and Perth of 12.6 and 9.8 per cent, respectively, had a large impact on the capital city average.

“Canberra is the only capital city where rental growth is accelerating, whereas it’s slowing across all capital cities,” Mr Kusher said.

Mr Kusher said this demonstrated that a weakness in rental market conditions was being felt across all other capital city markets.

“At the same time last year, rental rates increased by 1.7 per cent, which indicates a sharp slowdown in rental growth over the past year,” Mr Kusher said.

Mr Kusher said factors contributing to rental growth slowing down across the nation included falling real wages, excess rental supply in some cities and lower rates of population growth.

Canberra, by comparison, is recovering from cuts to the public service. New stock is in short supply and overseas migration into the capital has picked up in recent months.

“One of the main factors contributing to what we’re seeing in Canberra comes down to population growth,” Mr Kusher said.

“What’s happening in the ACT is that interstate migration isn’t overly strong, but overseas migration has been picking up in the last few quarters.”

While Canberra’s rental rates rose the past 12 months, they were still 5.7 per cent behind the peak prices recorded in 2012.

The median rental price for all Canberra dwellings was $539 a week. Houses are renting for a median price of $521, while the median rental rate for a unit is $408.

The median price for all dwellings in March 2012 was $539.

Mr Kusher said the rental rates will eventually catch up to their peak, however tenants should expect prices to ease as new stock is released to the market over the next couple of years.

“We’ve seen a bit of a bounce in unit approvals, but that will take some time to enter onto the market,” Mr Kusher said.

“There could be an 18 to 24 month lead time for these units to actually be constructed.”

Mr Kusher said rental rates will continue to rise until these new developments are complete.