'We tried for months': Canberra rental prices grow for record-breaking period

It took three months for Emma Ronnfeldt and her sister to find a Canberra rental property, and when they did, they were forced to take a risk – their urgency to find a place meant they were paying a lot more than they wanted to. 

The sisters’ experience of renting in Canberra reflects a high level of demand and eye-watering rental prices, which combined into an experience that was “super tough and stressful”. 

According to the latest Domain Rent Report, released on Thursday, Canberra’s median asking prices for both houses and units are still the highest of all capital cities. 

The median asking rent for a house in the ACT for the July quarter was a record $690 a week, which represented an increase of 1.5 per cent from the previous quarter, and 11.3 per cent from this time last year. 

For units, the median asking price was a record $550 a week, which was an increase of 1.9 per cent from the previous quarter, and up 10 per cent from this time last year. 

Sydney trailed behind Canberra as the second most expensive capital in which to rent, with a median asking price of $620 a week for a house and $525 a week for a unit.

The most affordable capital city in which to rent a house was Melbourne at $460 a week. For a unit, tenants would be best to find a bargain in Adelaide where the median asking rent was $380 a week. 

In Canberra, rental prices have increased for the seventh consecutive quarter for house rents, and eight for units. This is the longest period of soaring rent prices in the capital’s history. 

While Adelaide promised affordable rent, the sisters wanted to remain in the capital and, from an initial budget of around $400 a week,  had to fork out an additional $220 for their $620-a-week two-bedroom apartment in Reid.

They had been living in a sharehouse before they planned to move into their own apartment together.

“We had to look for a place straight away, and it was really difficult because we were unsuccessful for so many that we applied for,” Emma said. 

“We tried for months to look for a new rental property, and we applied for more than 20 rental places before we found this one.”

Domain chief of research and economics Dr Nicola Powell said there was one main reason for the record period of growth in rent prices. 

“The overarching thing for Canberra is that it is still a very competitive rental market for tenants,” she said. 

“There is a lack of supply overall of vacant rentals across Canberra, and that is driving the longest-running streak of escalating asking rents in Canberra’s history.”

According to Domain’s Vacancy Rates Report for June, Canberra’s rental vacancy rate was at a six-month high but still remained below 1 per cent, with 0.8 per cent of rentals available.

The main thing that would change the consistent growth in rent prices would be an increase in investment and growth in availability of properties for tenants, Powell said. 

“Investors were a growing buyer segment, but they have dropped from their peak,” she said. 

“We can’t shy away from the fact that it is still a very competitive rental market, and we need those conditions to improve for tenants to really feel the difference within the market.

“What we really need to see is continued increases in investment activity to help shift conditions for tenants.” 

Property manager Mel Cringle of Jonny Warren Properties said changes needed to be made at a territory government level to encourage more rental purchases from investors. 

“I think the biggest thing is that the ACT government needs to look at easing land tax, because that drives up costs for landlords, which drives up costs for renters,” she said.

“The ACT is the only place in Australia where, as an investor, you are paying rates and land tax, and the land tax is usually close to double what your rates are. 

“The ongoing costs for a landlord are quite high [in Canberra], which does in fact drive up those rental prices.” 

While high land tax and rates are pulling investors away from buying property, increasing interest rates are also adding to their hesitancy, Cringle added. 

“Investors aren’t buying properties to invest in because they’re worried tenants won’t be able to afford it,” she said. 

“That has always been a deciding factor when looking for a tenant – you don’t want someone living off two-minute-noodles and Weet-Bix.

“Owners of investment properties can’t live off two-minute-noodles and Weet-Bix either because they have an investment property they need to pay for.”