Number of rentals in Canberra significantly declining

There has been a sharp decline in Canberra’s rental supply, according to new Domain data released today.

The unit market has been hardest hit – the total supply of unit rentals in the month of February is down 27.9 per cent year-on-year.

Canberra’s total housing rental supply has also experienced a significant decrease of 17.4 per cent.

Domain chief data scientist Dr Nicola Powell attributed the decline to tighter lending conditions for investors.

“These initiatives were brought in to try and contain the risks that investors were causing in Sydney,” she said.

“But in other markets, particularly Canberra it’s really impacting the rental market and is really going to lead to an increase in rents for Canberrans.”

The tighter lending standards introduced by the Australian Prudential Regulation Authority last year ruled interest-only mortgages could only account for no more than 30 per cent of new residential loans. This has forced a retreat of investors in the Sydney market.

However, Powell said ACT’s high land taxes had also played a role in the rental supply decline.

“You also have to consider the land taxes that are placed on investors in the ACT which could deter investor activity,” she said. “Particularly when you don’t have those kind of hefty outgoings in other markets.”

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Latest data from SQM research shows Canberra’s vacancy rate is currently at 0.9 per cent and with the decline in rental supply this is expected to fall further.

“The market is being impacted by the availability of rental stock and what that is going to further do is tighten the rental market and see prices to continue to rise for tenants,” Powell said.

While year-on-year supply has declined in the rental market, the total supply for both house and unit sales listings has remained steady.

The total supply of houses on the market in February 2018 was 1181, slightly down from 1183 the same time last year. For units the total supply was 1207, up from 1142 last year.

“I’m expecting we will see an increase in the total sales supply this month,” Powell said.