National median unit price hits record high, while median house prices decrease in Perth and Darwin.
The cost of renting a house or unit in Canberra has surged at a higher rate than in any other Australian capital city in the past year, according to a new report.
The Domain Rental and House Price Report released on Tuesday shows the median weekly asking rent for a house in the nation’s capital was $500 as of December 2016 – 7.5 per cent higher compared to the same period 12 months earlier.
The cost of leasing an apartment jumped to $420 a week, up 7.7 per cent year on year. This is despite units prices dropping 2.2 per cent over the same period.
Canberra has recorded the largest jump in median rent among Australia’s capital cities. Photo: Graham Tidy
The results show it is cheaper to rent a property in Melbourne, where median weekly rent is $410 for a house and $380 for a unit.
Domain Group chief economist Andrew Wilson said the rise wasn’t surprising given the ACT’s tight vacancy rates, including 0.6 per cent for houses and 1.3 per cent for units.
“Rental affordability is a big issue in the Canberra market, but we can’t be surprised with a 0.6 per cent vacancy rate that we’re seeing a surge in house rents,” he said.
“I think we’re going to see more investors with those better yields, for units in particular. It’s not a good story for tenants.”
Gross rental yields have increased by 7.5 per cent for both houses and units over the past year, to 4.48 per cent and 5.7 per cent respectively.
Dr Wilson said the disparity between apartment asking rents and median unit prices reflected an underlying demand for rental properties in Canberra.
“We’re definitely seeing smaller units and less expensive units as a higher proportion of the market and that reflects a lower price,” he said.
“I do think the large price of house rentals in Canberra and the low vacancy rates means we’ll see tenants looking towards units as an affordable option.”
Allhomes data scientist Nicola Powell said Canberra’s rental price surge reflected somewhat of a recovery in the market after a period of decline a few years ago.
She said an influx of development, less political uncertainty and a halt to government sector job cuts had created a better environment for investors.
However, the latest results were not good news for new and existing tenants.
Dr Powell attributed the disparity between Canberra and Melbourne’s median weekly asking rent to the ACT’s higher wages.
She said many contractors moving to the capital for work brought their families with them and would be more likely to lease detached houses.
“You’re going to be looking for a rental property at a higher price point,” she said.
Across Australia, the capital city with the highest median weekly asking rent is Darwin at $550 (down 3.5 per cent year on year) followed by Sydney at $540 (up 1.9 per cent).
Hobart recorded the second-highest jump in rent over the 12-month period, with houses rising 4.4 per cent to $355 and units increasing 7.1 per cent to $300.
Perth was Australia’s worst-perfoming city with median house rents falling by 8.6 per cent to $370 a week and units falling 14.3 per cent to $300 a week.