Why renting a home in 2016 might just be getting cheaper

IT’S BAD news for landlords, but a silver lining for those tenants stuck on the rental treadmill.

It’s over! Skyrocketing rents have had their day as Australia-wide rental growth is shown to be the lowest in recorded history.

IT’S BAD news for landlords, but a silver lining for those stuck on the rental treadmill.

According to new data from CoreLogic RP Data, national annual rental growth at its lowest since the group began crunching numbers back in December 1996.

In its Rent Review report out today, the real estate data firm revealed that 2015 was a “lacklustre year for rental growth in Australia”, with rents increasing by just 0.3 per cent in 2015.

“We’ve never seen rental growth as sluggish as it is at the moment. Furthermore, we’re expecting to see more of the same over the coming months due to increases in the supply of

new housing, rental stock and a further slowdown in migration rates,” said Cameron Kusher, senior analyst at CoreLogic.

“The good news for those looking to rent is the possibility that rental rates will fall even further over the coming year,” Mr Kusher said.

“While the news for renters will be welcomed, investors may be facing weaker capital gains coupled with little in the way of rental growth or yield,” he said.

The only cities to see an increase in weekly rental rates were Sydney with an increase of 1.9 per cent, Melbourne (2.2 per cent), Hobart (0.6 per cent) and Canberra (1.9 per cent) while rates fell in Brisbane by 0.3 per cent, in Adelaide they were down by 0.2 per cent), they dropped in Perth by 8 per cent and in Darwin took a dive of 13.3 per cent.

Rents are on their way down which is good news for renters, but landlords might be out of luck.

In a nutshell, the report outlined, by the end of the year the combined capital city rental rates were sitting at $486 a week for houses and $464 a week for units.

Capital city dwelling rental rates (units and houses combined) came in at $483 a week, an increase of just 0.3 per cent over the past 12 months— a record low rate of annual growth.

When comparing data between December 2015 and December 2014, the 2014 annual rental growth was slowing, but was at least tracking at a much higher 1.8 per cent.

Mr Kusher said the numbers highlighted just how much the Australian rental market had eased throughout 2015.

“The construction boom across the capital cities, coupled with slowing population growth, low mortgage rates and the recent heightened level of activity from investors are the major contributing factors to the slowing rental growth in 2015,” Mr Kusher said.

“Although Sydney and Melbourne saw the largest ramp up in new housing supply, both cities still recorded rental increases over the year, although rental growth is slowing relative to 12

months earlier,” he said.

“It is clear that the increase in investment stock continues to provide landlords with little scope to lift rental rates while the low mortgage rate environment provides little incentive to push yields higher.”

He predicted that growth in rental rates is likely to remain weak, or potentially slow even further over the coming months.

“The large pipeline of residential construction activity and recent high levels of investment demand means that renters are likely to continue to have plenty of choice,” Mr Kusher said.