‘The peak of rental growth has passed’: Canberra house rents fall, but are still most expensive

Canberra’s median weekly asking rent for houses has decreased for the first time in two years, but the capital still remains the most expensive in which to rent a house or unit. 

According to the Domain Rent Report, released on Thursday, the median rent for houses in Canberra has dropped by 1.4 per cent over the quarter to $680 a week, while units remain unchanged from the previous quarter at $550 a week.

Canberra was the only capital city to record a decrease in the median weekly asking price for houses. 

“While it was a modest decrease of $10 [over the quarter], it is a stark comparison to the rapid escalation of house rents that had preceded [it],” said Domain chief of research and economics Dr Nicola Powell.

Despite the quarterly decline in house rents, Canberra still stands as the most expensive capital city in which to rent, but it ranks equal with Sydney for units – rents in the harbour city continue to rise while those in Canberra have stabilised. Sydney’s median weekly rental asking price for a house was $650, a 4.8 per cent increase from the previous quarter. 

Powell said the steady increase in Canberra’s vacancy rate, which is now at 1.1 per cent, has played a significant role in declining rents despite remaining tight. 

“What we have seen in Canberra is a 21-month high in the vacancy rate, which really helps to showcase the alignment between supply and demand,” she said. 

“We have seen this increase in the availability of vacant rentals, so we can understand that the boost of the vacancy rate is helping to alleviate rental prices a little bit.

“What [the data] shows is the peak of rental growth has passed, and in terms of annual rate of growth, is it also now slowing down from what we had been earlier in the year. This is better news for tenants than they have had in a while.” 

For current tenant and full-time student Jessica Preston, the downturn in the rental market comes as welcome news. 

Preston is renting a three-bedroom unit in Bruce with two housemates, but when their lease ended in August, the landlord hiked their weekly rent.

“We really wanted the security of having [a fixed-term lease], but when we requested that, we were basically put on the spot and told, ‘We’ll only give you a fixed lease if you pay this increase of $40’,” she said. 

Preston’s rent went up to $570 a week from $530.

The possibility of more rental properties on the market lowering the cost “would be a fantastic change”, as alternative rental properties currently on the market were still out of budget, Preston said. 

“My ideal place would be a nice little townhouse … it would just give us more room,” she said. “I have been looking around at listed rentals, even though we aren’t looking to move right now, and the places are pushing our budget a little too much, which is really sad, but that is where we are at.

“The only reason I can afford to rent this place is because I have three housemates … I could not afford to live alone.” 

This matter of affordability following the record length of rental hikes was likely one of the factors contributing most to Canberra’s slight decrease in rent, Powell added. 

“We are definitely seeing an increase in supply to alleviate conditions for tenants, but I think it’s unusual to see a decline in rents when the vacancy rate is still tight, which is where the conversation of affordability comes in,” she said. 

“Tenants can only face so much with the additional cost-of-living pressures, and incomes haven’t risen at the same pace that rents have.

“As a result, this is the weakest outcome we have seen in the rental market in roughly two years.” 

Senior property manager Kylie Bickerton of Blackshaw Weston Creek & Molonglo said there had been a noticeable drop in inquiries and potential tenants showing up at open homes across the board in Canberra. 

“We are also finding that we are approving tenants who are then withdrawing their applications … people are being open and honest about having applications in multiple properties,” she said.

“Two months ago, we were renting properties at the first open home – there were just so many people and the urgency for tenants to secure something immediately was there.

“I think from here we will continue to see a steady decline … things, I believe, are starting to soften to a more normal market again.”