June quarter rent stagnant due to economic concerns
Fears about the economy stopped landlords from increasing rents over the last three months even with extraordinary house price hikes, according to a quarterly survey by Australian Property Monitors.
The data released on Wednesday revealed only Sydney and Canberra posted improvements or stable median rents in both houses and units.
Nationwide median rents increased only by under 1 per cent in the three months to June. Rents for houses slumped in most capital cities, including Melbourne, during the quarter.
This mixed outlook for the rental market is the latest sign that the property sector has lost its vigour. Auction clearance rates have been dropping in recent months and home loans in June dived to their deepest level in nine years.
In Melbourne, the weekly median rent fell 1.4 per cent to $365 for houses and climbed 2.9 per cent to $350 for units.
After a stagnant June quarter, rents, however, are expected to pick up once employment and incomes ascend and vacancy rates fall.
APM economist Matthew Bell said while landlords withheld rent increases because of the uncertain environment, that is likely to change as the economic outlook settles.
"We've seen retail spending be very weak over the last three or four months. We've seen the share market been quite weak in the June quarter, and I think that's probably fed through to landlords asking for not quite as much rental increases as the vacancy rates and other factors might imply," he said.
"We've still got a lot of people looking for not quite enough properties out there, and there's not a lot being built on the horizon."
"We still see pretty low building approvals and new houses being built, so you'd have to say in the next six months to a year, I'd expect to see rental growth pick up again."