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ACT still expensive place to live despite fall in rent prices

Canberra has maintained its status as one of the country's most expensive places to lease a home, despite recording a sharp decline in asking rents during last year.

Data issued on Thursday by Australian Property Monitors shows Canberra was the only capital city to record a fall in the median asking rent for units for the year.

Units dropped by 4.7 per cent to an asking rent of $410 and houses fell 4.2 per cent to $460.

The nation's capital was the only city to record a slide in rental prices for both forms of dwelling.

Gross rental yields for houses dropped by about 7 per cent for houses in the territory, which was the largest fall in the country.

The rental report for the December quarter showed Canberra unit rents picked up by 2.5 per cent during the last three months of the year while house rates fell 1.1 per cent. Nationally, median weekly asking rents for houses for the quarter increased 0.9 per cent and unit rents fell 0.4 per cent.

Australian Property Monitors senior economist Andrew Wilson said while the fall in rental rates was good news for those renting in Canberra, the city still remained the third-most expensive behind Sydney and Perth.

He said issues to do with the economy and confidence had created volatility in the housing market, which had also been felt in the rental market.

Independent Property Management managing director Norm Honey said the huge number of rental properties on the market during the year had led to a drop in prices.

He estimated there were about 3000 properties available to rent in the ACT at the beginning of 2014 compared with 1600 about 18 months ago.

But he said an influx of new developments settling during 2013 would have had a big effect on rental rates and vacancy rates.

Mr Honey said a greater issue was that renters left older properties for newly built ones, creating a backlog of older residences.

15 comments

  • It is not so difficult to work out why - all you need to do is take a look at the exorbitant Land Tax rates charged in the ACT compared with other states. A residential property in Melbourne with an unimproved value of $800,000 has a Land Tax liability when rented out of less than $2000 per year, and in QLD it is $2,500. In NSW you pay $6,300. A property of the same unimproved value in the ACT is liable for Land Tax of over $11,500. Do the maths - that's a hefty amount to have to get back in rent before you even start earning a cent.

    Commenter
    Janel
    Location
    ACT
    Date and time
    January 16, 2014, 9:21AM
    • thanks Janel. This is the bit of information I wish I knew before I started hating Canberra.. many things are probably unfair to Canberra when comparing to other Capitals in the world !

      Commenter
      rmm
      Location
      canberra
      Date and time
      January 16, 2014, 9:55AM
    • Katy and Co have to fund their social engineering programs in Canberra somehow!

      Commenter
      social
      Date and time
      January 16, 2014, 10:43AM
    • Good point. I'll borrow your idea when property agents talk up the real estate investment return next time.

      Commenter
      yman
      Location
      canberra
      Date and time
      January 16, 2014, 10:58AM
    • excellent comment Janel. I rent out a house in Downer and get $480 a week in rent. One third of this rent goes straight to the ACT government in Land tax and rates ($8000 per year). ONE THIRD!. So I could rent it out for $320 a week and be in exactly the same position if it wasn't for the taxes - I'm sure tennants would find this level much more reasonable.... And people think landlords in Canberra a greedy, in reality they are mugs, because on top of land tax and rates they need to pay water and sewerage, insurance, real estate agents, repairs and maintenance, and mortgage repayments as well if they owe money on the propoerty. Why would anyone do it? I'm going to get out in the next year or so. And the result, less properties to rent meaning higher rents than in other states in Australia. The ACT government know this, but when asked about the level of rents in the capital they just shrug their shoulders. They don't want the general public to know its because they tax the hell out of rental properties

      Commenter
      B354
      Location
      ACT
      Date and time
      January 16, 2014, 12:20PM
    • Looks like this Socialist/Communist utopia isn't so sweet after all.

      Socialists love providing services from the profits of the "rich and greedy". Very keen to share the wealth forcibly extracted from the hard workers and industrious.

      Takes quite a bit of money to pay for all the services we...ah.... need.

      Commenter
      evanism
      Location
      The Socialist Nirvana
      Date and time
      January 16, 2014, 1:43PM
    • @B534

      Rents and indeed property prices will tumble over the coming years. It has actually already started despite the positive spin real estates and developers try and put out. The amount of properties for rent on all homes alone is at a record of over 3000. This compares to just over 1000 at the beginning of 2013. Ouch. This is before you even factor the huge number of private rentals and other rental sites. And as you say plenty of so called investors many negative geared and in debt to their eye balls will be looking to get out soon further saturating the market. Slowing local economy, rising unemployment, and huge amount of housing and unit stock close to completion. It doesn't take a rocket scientist to tell where this is all headed. Sad days ahead for Canberra unfortunately.

      Commenter
      Peter
      Date and time
      January 16, 2014, 4:22PM
    • You knew the deal before you bought the house - so stop whinging. Buy a house in another state if you're so appalled by it.

      Commenter
      vote for pedro
      Date and time
      January 16, 2014, 10:54PM
  • And this is why I live in Goulburn and commute. My mortgage, rates, electric, water, petrol and car maintanence combined is only slightly higher per week than the median rent of a house and I own my house and the land. And I'm not going to get kicked out by a fickle owner, can have my pets and do what I want to the house. Its a no brainer. For 2 hours travel a day total its worth it.

    Commenter
    commuter
    Date and time
    January 16, 2014, 9:59AM
    • Canberra has had it too good for a long time and crashing back down to reality was inevitable as it will be once the mining boom is over in Perth. If I take my 550k or whatever median average house price is now down to Melbourne, i'd be getting a lot more house for it than in Canberra. I wouldnt expect the market to come back for another 2-3 years until the next election when the govt decides to start hiring again. Still a lot more pain to come once all the VRs get processed.

      Commenter
      JoniWalker
      Date and time
      January 16, 2014, 10:25AM

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