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Sydney and Melbourne are the only capital cities with declining rental markets

The latest consumer price index (CPI) figures show the rental market has continued its recovery from the impact of the pandemic in most Australian capital cities.

However, Real Estate Institute for Australia (REIA) president Adrian Kelly said Sydney and Melbourne saw rents fall slightly, likely due to the two largest capital cities enduring further extended lockdowns.

The June 2021 quarter CPI figures indicated the capital city weighted average showed that rents increased marginally by 0.1 per cent for the June quarter with an annual drop of 1.3 per cent.

Sydney and Melbourne had falls of 0.6 per cent and 0.5 per cent respectively for June. 

“All other capital cities had increases, with Perth having the largest rise of 2.6 per cent for the quarter followed by Darwin and Hobart at 1.9 per cent and 1.6 per cent respectively,” Mr Kelly said.

“For the last 12 months, Sydney had the largest fall of 3.4 per cent and Hobart the largest increase of 3.1 per cent.”

Mr Kelly said REIA research showed rental affordability has been relatively stable for the first 20 years of this century. Details will be available in the report, Housing Affordability: The First 20 Years of the Century, which will be published mid-August.

“The Housing Group of the CPI increased in the June quarter by 0.3 per cent but decreased by 0.2 per cent for the year. 

“The All Groups CPI, increased by 0.8 per cent in the June quarter and by 3.8 per cent for the year with the quarterly changes for the analytical series of trimmed mean and for the weighted median both at 0.5 per cent.

“The annual changes for the trimmed mean and for the weighted median were 1.6 per cent and 1.7 per cent respectively. 

“Both analytical series are well below the RBA’s target rate of 2-3 per cent and suggest that there will be no pressure on interest rates for some time despite the jump in the annual rate of inflation,” he said.

Mr Kelly noted the increase in the weighted capital city index in the 12 months to June for rents is the lowest since March 2020 when COVID-19 emerged in Australia.

However, the index for rents in Sydney has not risen since December 2018 and Melbourne index has not risen since March 2020.  

“With ABS’s housing finance figures showing increased lending to investors rent increases will continue to be moderated,” he said.

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