Rents are rising at their slowest annual pace in almost half a century, according to ABS figures.
A steady stream of new apartments and houses has increased consumer choice and weighed on rents.
But not all renters stand to benefit.
The latest round of inflation figures show that national rents flatlined in the December quarter and rose just 0.2 per cent over the year – the lowest annual increase since records began in 1973.
Renters in Darwin and Sydney had the most to cheer about.
The Northern Territory capital saw rents fall 1.5 per cent over the quarter and 6.6 per cent over the 12 months to December 30, 2019, while Sydney saw falls of 0.3 per cent over the quarter and 0.8 per cent year on year.
Perth was the only other capital to record falling rents over the quarter.
But rents in both Brisbane and Melbourne increased less than the lift in national wages (2.2 per cent).
Hobart was the outlier.
A lack of supply conspired with a booming short-stay accommodation sector to push up rents in the Tasmanian capital 5.6 per cent over the year.
Riskwise Property Research CEO Doron Peleg attributed Sydney’s falling rents to the flood of new apartments coming onto the market.
Although building completions are declining and the pipeline of future projects shrinking, Sydney still has plenty of excess stock that’s yet to be absorbed, Mr Peleg said.
This means renters have greater choice and investors must lower rents to lure in new tenants.
Tenants Union of NSW senior policy officer Leo Patterson Ross said rents still had a long way to fall before they could be considered affordable, though.
Not least because the falls had come after decades of undersupply.
According to his calculations, today’s median rent in Sydney is $156 higher than it would have been had rent tracked inflation since 1997, and $107 higher than it would have been had rents increased in line with wages growth.
He said renting conditions and security of tenure hadn’t improved, either.
“There are definitely people who have found it easier to find a new place than they would have a couple of years ago,” Mr Patterson Ross said.
“But they tend to be the people who were at the front of the queue in the application process, anyway,” referring to how higher-income households are renting for longer and moving into the only homes that low-income households can afford.
“But what I haven’t been seeing is agents offering long leases or [allowing] pets, or any incentive other than trick ones, such as rent-free periods for a week or two [rather than a rent reduction].”
The ABS figures comes after a series of reports claiming renting has become more affordable for the average Australian.
ANZ and CoreLogic revealed in June that rents as a proportion of income had been steadily declining since 2012.
The Real Estate Institute of New South Wales (REINSW) announced in November that Sydney’s vacancy rate had again jumped above 3 per cent – the level at which rents start to fall.
And Domain’s latest rental report found some Sydney rents had fallen by almost a quarter over the year.
Dr Sarah Hunter, chief Australia economist at BIS Oxford Economics, said rents in Sydney and Melbourne weren’t expected to pick up until the end of 2021.
That’s because the number of building approvals have found their trough in the current cycle, meaning the number of new buildings coming on to the market will hit rock bottom in roughly 18 months’ time.
“So, yes, there’s some support coming through for rent inflation, but not for quite some time,” she said.
“There probably won’t be a marked pick up until the back end of 2021, or early 2022, something like that.”