Rent reprieve: Canberra house and unit rents in decline

Canberra experienced a decline in both house and unit rents over the September quarter, marking the first time in over four years that both have dropped simultaneously.

According to the latest quarterly Domain Rent Report, released on Thursday, this contrasts with the trend in other capital cities, where rents remained steady.

Domain chief of research and economics Dr Nicola Powell said this was Canberra’s first quarterly decline in house rents in a year, with a 0.7 per cent decrease (or $5) to $680 a week.

“This is the lowest weekly asking rent since December 2023, but still $10 below the record set in December 2022,” she said.

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Unit rents also declined for the second consecutive quarter, dropping by 1.8 per cent (or $10) to $550 per week, marking the weakest September quarter performance since 2014.

“It’s the first time in nine years that unit rents have seen two consecutive quarters of decline, leading to stabilised annual growth for the first time in a year,” Powell said.

“Canberra now ranks as the third-cheapest city to rent a unit, alongside Melbourne and Darwin, for the first time in history.”

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The capital’s vacancy rate fell to 1.6 per cent in September, the lowest in four months. Despite this, it remains the highest among the capital cities, offering more favourable conditions for tenants.

Powell said rental demand was easing, with the number of prospective tenants per listing on Domain falling to its lowest level since 2019, indicating a better balance between supply and demand.

According to the report, there has been a notable increase in investment activity, with the value of investor loans rising by 35 per cent annually. This suggests investors are likely responding to capital growth potential and seeking to buy before the RBA lowers the cash rate, which is expected to boost housing activity.

Currently, investors account for 38 per cent of new home loans – significantly above the decade average.