Yahoo Finance Why Canberra is now the most expensive city for renters
At $560 a week, Canberra has reached “rental boiling point”, and it’s pushing lower income earners and investors out.
Canberra has been named Australia’s most expensive capital city for those renting houses, bumping Sydney off the podium for the first time in 11 years, the latest Domain Rental Report has revealed.
What’s happening?
Asbestos removal scheme: The median weekly asking rent for Canberra increased 3.7 per cent in the year to December 2018 as the Mr Fluffy asbestos removal scheme pushed residents into rental accommodation as their homes were rebuilt.
More than one thousand (1,022) properties were eligible for a government buyback or demolition.
New residents moving in: And as the asbestos removal scheme took affect, new residents were “lured” from interstate and overseas by Canberra’s job prospects, universities and major infrastructure projects, Domain senior research analyst Nicola Powell said.
High income population: “The high-income earning workforce has also helped to drive rents higher, making it increasingly unaffordable for lower income households,” Powell continued.
Land tax: “With investors slugged with higher rates and land taxes, it is also likely landlords are passing on the additional costs to tenants, or opting for high yielding short-term leases in order to recover costs.”
Board director at the Real Estate Institute of the ACT, Hannah Gill said changes to land taxes are a contributor to rising rents.
Supply constraints: Continuing, Gill noted that there are more first-home buyers and owner occupiers than investors in the capital city and this is also affecting the number of properties available to rent.
“Stock isn’t being replaced as fast as it’s required.”
‘The perfect storm’
Describing it as the “perfect storm”, Gill said investors will struggle to recover costs and be forced to drive up rents.
Tenants’ Union ACT executive director Deb Pippen also warned that the changing landscape is making it increasingly difficult for those on lower incomes to afford to rent.
“There’s a lack of supply of affordable housing in Canberra [and] more people are looking for rentals at that end of the market,” she told Domain Media.
“Vacancy rates in Canberra have been low for many, many years and it means there aren’t enough vacant properties for it to be a healthy market.”
How does Canberra stack up?
While Canberra has the most expensive weekly rents for houses, Sydney holds the title of the most expensive rental market for units.
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