Nicola Powell: Rental market hits a peak

The rental market is booming as the beginning of the year signals a new start for many tenants. January tends to experience a peak in activity with an influx of lease renewals and a move for some. Canberra is particularly active as students seek to secure a home ahead of the new university year and graduate jobs commence.

Over January a staggering 1630 properties were leased across Canberra and greater Queanbeyan, a jump of 31.4 per cent from December. Stock also jumped from December by 26.3 per cent to 1461 properties listed on allhomes.com.au.

Compromise could be on the cards for many tenants. The median house rent rose $40 over the past year to $530 a week. The median rent for a unit rose by $35 to $420 a week. As affordability becomes stretched, some tenants will be forced to move in search of a lower price point.

Tenants need to brace themselves for further potential price hikes. Vacancy rates remain low indicating more hikes to rent could be possible, pushing the journey to home ownership further out of reach.

Rental prices may have risen over the past year but tenants are forking out the same for a unit in 2017 as they were six years ago. The struggle to save for a first-home deposit is real but data shows tenants leasing a unit could be better off than they were over half a decade ago. The median weekly unit rent was $420 during January 2011 the same price being paid in January 2017. The median weekly house rent during January 2011 was $500.

If the rate of inflation, low wages growth and house price growth are factored in, the struggle becomes evident. Canberra has the highest average wage of all the state and territories but tenants face some of the highest rents.

Housing approval rates continue to bring a glimmer of hope. Unit building approvals remained strong throughout 2016. It is likely that interstate investors are keeping a close watch over the Canberra market. Plumping unit prices, improving rental yields and low vacancy rates will certainly make for an attractive investment. This should help to bring price respite.

Nicola Powell is a property expert for Allhomes. Twitter: @DocNicolaPowell