Even with a subdued quarter for rental prices, annual growth figures show rental prices for units are approaching that for houses in most capital cities, according to a new report released on Thursday.
The Australian Property Monitors Rental Price Series Quarterly Report revealed national median asking rents for houses fell by 0.2 per cent while unit rental prices rose by 1.1 per cent in the quarter.
Median asking rents for houses over the September quarter remained steady and recorded no growth in Sydney, Melbourne, Brisbane, Perth and Darwin, while rental prices fell in Adelaide by 2.9 per cent, Canberra by 2.1 per cent and Hobart by 1.6 per cent.
Sydney was the only market to see growth in median weekly asking rent for units in the quarter, rising by +2.2 per cent, with other capital cities stable.
Hobart and Canberra however recorded falls in unit rentals with Canberra down by 2.3 per cent and Hobart recording a significant fall of 6 per cent.
Despite stable rental prices in the September quarter, significant annual growth for both houses and units has been recorded in most capitals, with Canberra and Sydney in particular seeing growth of house rental prices of 3.3 per cent and 3.1 per cent, respectively.
The rental market for units in most capital cities however has outperformed that of houses over the year to September, with median asking rents for units approaching parity with those for houses in many capital cities.
In Melbourne, the current median asking rent for units is $350 (houses $360), in Sydney $460 (houses $495), in Brisbane $360 (houses $370), in Perth $370 (houses $380) and in Canberra $430 (houses $465).
“Though rental growth has been generally stable over the September quarter for both houses and units, annual figures show unit rental prices have increased at a significantly greater rate in most capital cities compared to houses. This indicates increased competition from discontented first home buyers entering the rental market, particularly in late 2010 and early 2011,” said Dr Andrew Wilson, Senior Economist, Australian Property Monitors.
“As a consequence, the median weekly asking rentals for units is now fast approaching that of houses in many capital cities, as the overall demand for units for both lifestyle and affordability reasons continues to be greater than the demand for more expensive and generally outer-suburban houses.
“With the prospect of continued stable interest rates, an expected increase in buyer activity will take the pressure off the rental market by decreasing competition for available rental properties and motivating investors to re-enter the market,” said Dr Wilson.