National rents finally on the move again

National rents appear to be on the rise as a result of recent rate increases, an improvement in property values, and a tightening of housing supply in many capital cities. The Reserve Bank of Australia has raised the cash rate six times in the last eight months to 4.5 per cent, sparking the increase in rents as the cost of mortgages becomes more expensive.

Rents rose nationally by 1.5 per cent in the March quarter according to Australian Property Monitors (APM), more than the previous quarter’s increase of 0.6 per cent and a marked change from the 2 per cent rise in rents experienced for the whole of 2009 as the economy slowed. Darwin experienced the largest gain of 10 per cent from the previous quarter, whilst for the first time in 18 months Melbourne rents moved upwards.

''Australia is suffering from a relatively low supply of new properties being built which provides no relief for the current vacancy rates, particularly in the major rental markets of Sydney and Melbourne”, said APM economist Matthew Bell.

The recent quarter’s results tip rental price growth to head back to previous levels of between 7 – 10 per cent over 2010. Over the last five years, many capital cities registered rental growth for houses of between 6 – 7 per cent, and 7 – 10 per cent for units.

"As the economy continues to improve as the year progresses, rents are expected to get back to and exceed those longer term levels of annual growth”.

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