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Rental rates showed no signs of lifting in the month of July and were lower still for the 12-month period to July 2016, as the housing oversupply begins to take effect.
The CoreLogic July Rent Index fell by 0.6 per cent over the 12 months to July 2016, followed by a 0.3 per cent drop over the month of July.
Combined capital city median weekly rents are currently $483, their lowest since December 2015. In contrast, this time last year capital city rental rates had increased by 0.9 per cent.
Combined capital city rental rates are $485/week for houses and $467/week for units.
CoreLogic research analyst Cameron Kusher said there are a number of factors forcing rental rates lower.
These include the softest wages growth on record, relatively high levels of housing investment following recent record highs, historically high levels of new dwelling construction – most of which are units, which are more than twice as likely as houses to be rented – and the slowing of population growth.
Mr Kusher said the combination of these factors means landlords have little scope to increase rental rates in the current market.
He also said the current rental market conditions will have a flow-on effect for older stock – “particularly units, given we’re seeing so much new unit supply being added to the rental market, much of which is located in inner-city locations”.
He added that the current rental market weakness is expected to persist.
Mr Kusher said that while rental rates are falling and values continue to rise, gross rental yields will remain at record-low levels.
In July, rental rates dropped in all cities except Melbourne and Hobart.
Over the past 12 months, rental rates have increased in Sydney (+0.4 per cent), Melbourne (+2.0 per cent), Hobart (+6.2 per cent) and Canberra (+1.9 per cent), and fallen in Brisbane (-1.0 per cent), Adelaide (-0.5 per cent), Perth (-9.2 per cent) and Darwin (-15.7 per cent).
Hobart and Canberra are the only capital cities to have recorded an increase in year-on-year rental growth.
[Related: Property survey highlights major paradox]
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