After showing signs of growth recovery in the March quarter, national rental growth for houses remained largely flat over the June quarter, the latest report has shown.
According to Australian Property Monitors (APM), national house rents rose by only 0.7 per cent over the June quarter of 2010.
On the flipside, unit rents showed solid rental returns, national growth coming in at 3.5 per cent for the June quarter.
APM economist Matthew Bell said despite vacancy rates remaining low in most capitals, weak consumer spending and confidence had stalled rental growth.
In addition, Mr Bell said worries over the world’s major economies spilled over into the local share market which fell nearly 10 per cent – also contributing to a stall in rental growth.
“The exodus from the rental market to the ownership market that occurred in 2009 is still having an effect on asking rents in most capitals,” Mr Bell said.
Despite this, Mr Bell said the alternative option for renters of moving into ownership has become less attractive. He said property prices have risen in most cities over the last year along with interest rates, deterring home buyers.
“As leases expire and are renewed however, it is expected that a robust employment market, rising incomes and low vacancy rates in most capitals will start seeing asking rents increasing again, as we’re already seeing in Sydney, the country’s largest rental market,” he said.