The impact of the rental market on young Canberrans’ property decisions

Rental asking prices in Canberra have skyrocketed over the past year, and continuous rent hikes are making things difficult for young Canberrans hoping to leave the nest. 

Josh Kluken, a 22-year-old full-time public servant and part-time student, has decided to skip the rental market altogether and is looking for a place to purchase instead. 

For the past 18 months, he has been looking for an entry-level townhouse in the Woden Valley, Weston Creek or Molonglo Valley regions and even came close to a purchase in February. 

“If the right property comes around at the right price, I would certainly look at buying, but in the meantime, I will continue living at home,” he said.

As a potential first-home buyer, Kluken has made a plan for what he can afford within his price range, remaining cautious of his borrowing capacity, and believes there is no benefit to considering renting as an option. 

“There is an argument to be made as to why renting may be a better approach, but I am aware that Canberra has the most expensive renting market at the moment,” Kluken said. 

“There are many owners who are currently looking for people to rent out a room, but at this point and with prices as they are, I may as well purchase my own property.”

The latest Domain Rent Report found the median weekly asking price in Canberra increased by 1.5 per cent over the quarter to $690 for a house and 1.9 per cent to $550 for units. 

The report also revealed the capital recorded the longest period of increasing rents in its history, with median weekly rents for houses and units increasing over seven and eight consecutive quarters, respectively. 

Despite the capital’s record period of growth in rental prices, there may be a change coming in the market, Domain chief of research and economics Dr Nicola Powell said in the report.

“This continuous growth has maintained Canberra as the most expensive capital city [in which] to rent in Australia, a title held by houses for the past four years and units for almost two,” she said. 

“While rents are still heading north, they have lost some momentum … Canberra is starting to see a slight shift in the supply and demand dynamics.” 

Vacancy rates in Canberra increased for the third consecutive month, reaching 1 per cent over the month of August, according to the latest Domain Vacancy Rates Report. This is the highest vacancy rate in Canberra this year. 

The number of vacant rentals over the month was 407, which was an 11.5 per cent increase on the month prior.

Property manager Emily Murray of HIVE Property said the improved vacancy rate is largely due to the inability of tenants to pay the rising rents.

“I have seen growing numbers of stock on the market, as tenants are vacating their properties and not paying the higher rents,” she said. 

“We are going through a transitional period.

“What we are finding instead is tenants aren’t able to afford these rental hikes that were passed onto them because of inflation. Tenants are also a bit spoilt for choice … we aren’t getting as many people through open homes as we were back then.” 

With listed homes also remaining on the market for a longer period of time than they used to, there is a need for re-evaluation from landlords regarding these price hikes, Murray added. 

“We are trying to educate our owners now that if you have a good tenant who is still paying the same rent, to keep them around and avoid increasing prices,” she said. 

“We have found that properties are sitting on the market for an average of a week or two longer than a few months ago.

“It is better for landlords to reconsider going onto the market, and instead talking to the tenants to keep the rents the same or only increasing very slightly, to keep the tenants in the property.”