Australian Capital cities have recorded the slowest (net) rise in dwelling rents on record. While Sydney & Hobart had strong increases, the falls in Darwin and Perth offset this.
The slowdown in rent is attributed to the increased level of stock given the strength of development in the residential market and particularly unit stock being sold to Investors.
There are a lot of models being done that support both sides of the argument. But one has to wonder would our record low rental growth continue if we were to mess with negative gearing? While those who support abolishing negative gearing have the intention of reducing the cost of housing by minimising the market competition from investors, we need to think of the impact on those that will still need to rent rather than buy. If the supply of development stock and therefore rental options is impacted by removing incentives for investors, the competition for rental sites and therefore the cost to rent them will increase.
Rents in Australian capital cities are rising at their slowest pace on record. The latest CoreLogic RP Data rental index shows that average capital city rents rose 1.5 per cent to $488 a week, the weakest rise on record. "The sluggish pace of rental appreciation can likely be attributed to the ongoing boom in dwelling construction across Australia's capital cities accompanied by record high participation in the housing market from investors," the report said. "Most of the new capital city housing stock is units and this type of stock is much more likely to be owned by investors providing additional rental options across the capital cities." The report also found that with city rents increasing at their slowest pace and home values falling, gross rental yields for landlords had decreased.