In the ever-evolving landscape of Australia’s rental market, one glaring outlier stands out amidst the chaos of soaring prices and dwindling vacancies: Canberra, the nation’s capital. While cities like Sydney, Melbourne, Brisbane, and Perth grapple with unprecedented spikes in rental costs, Canberra remains relatively stable. But what exactly sets the ACT apart from its counterparts?
A recent Domain rental report sheds light on the stark divergence in rental trends across the country. While advertised rental prices for units experienced double-digit growth in major cities, Canberra saw a modest increase of only 3.6 percent over the last year. House rentals in Canberra even defied the national trend by declining 0.7 percent, a phenomenon unseen in other state capitals.
The key differentiator lies in the ACT’s unique rental regulations. Canberra stands as the only state or territory in Australia that imposes limits on rent increases. Landlords are restricted to raising rents by no more than 110 percent of rental inflation, curbing excessive hikes even amidst soaring demand. Associate Professor Ben Phillips from ANU’s Centre for Social Research and Methods suggests that while rent caps may mitigate extreme increases, they alone do not fully account for Canberra’s rental market stability.
A more significant factor contributing to Canberra’s resilience is its robust housing supply. Unlike many other regions grappling with housing shortages, Canberra boasts a healthy influx of new dwellings, both apartments and detached houses. With a vacancy rate of 1.4 percent, Canberra sits in a landlord-friendly zone, albeit closer to Domain’s balanced market threshold of 2-3 percent compared to other capital cities.
Phillips emphasizes that Canberra’s relative affordability does not equate to cheap rent. In fact, Domain data reveals that Canberra ranks among the most expensive cities for rentals, trailing only behind Sydney. This suggests a potential saturation point where market forces may temper further rent increases. Oxford Economics Australia predicts a slowdown in rental price growth over the next few years, indicative of Canberra’s market dynamics reaching a delicate equilibrium.
However, Phillips offers a nuanced perspective, noting that while current rental affordability may seem dire, it marks an improvement from a decade ago. Despite recent spikes, rental costs remained relatively stagnant for approximately ten years prior. When viewed through a longer-term lens, overall rental affordability has marginally improved, according to ABS CPI data.
In conclusion, Canberra’s resilience amidst the rental market chaos stems from a combination of prudent regulatory measures and sustained housing supply. While rent caps provide a buffer against excessive increases, it is Canberra’s robust housing market that truly sets it apart. As other cities grapple with escalating rental costs, Canberra stands as a beacon of stability, albeit with its own affordability challenges.
