Glut of units drives down rents
An influx of developments, such as the complexes on Flemington Road in Gungahlin, have helped push Canberra's rental market to new levels. Photo: Graham Tidy
AN INFLUX of developments has pushed Canberra's rental market to new levels of supply as anecdotal reports of discounted rents begin to emerge.
The vacancy rate is approximately 3 to 5 per cent, according to Badenoch Real Estate principal Symon Badenoch, who said there were more properties on the rental market now than he had seen in 15 years.
He said traditionally demand had been higher than supply in Canberra, but the market had softened and owners who could not sell had turned to renting.
The influx of new complexes in areas such as Flemington Road in Gungahlin had worsened the situation.
''You are getting 150 units being completed behind another one - and another one,'' he said. ''Suddenly you are getting 1200 properties added to the rental market in one hit if they are not picked up by buyers who want to move in.''
Inner-city areas as such as Braddon were also affected by increases in the number of properties as numerous developments came online, with most of apartments already sold to investors.
The Mode3 complex on Lonsdale Street is sold out, according to Colliers International's Paul Powderly, who said investors had bought about 70 per cent of the 115 units.
In response to reports of landlords discounting asking rents, Mr Powderly said investors had to be realistic when setting prices.
''When you put 75 or 80 new properties up for lease, obviously it takes a while to lease them all,'' he said.
''But it all depends on how much rent they're asking. When there's a bit of supply in the marketplace, you've got to be realistic.''
The last review from property adviser Herron Todd White also alluded to rental discounts as more developments throughout Gungahlin, Belconnen and Molonglo add to the supply.
''We are expecting to see a surge in supply of rental properties which could possibly lead to very competitive rental pricing within the market,'' it stated.
ACT Tenants Union executive officer Deb Pippen said reports of rental discounting were not surprising, but it was a phenomenon recorded only at the upper end of the market.
''Not everyone is looking at the upper end of the market,'' she said. ''The problems with affordability and finding affordable properties remain. The stress and the problems at that end of the market haven't improved.''