The ACT was the first jurisdiction to show more supply of housing stock helping return affordability to the rental market, says the Property Council of Australia.
The latest Australian Residential Development Outlook, a comprehensive look at fundamental indicators for the residential market, has found nationally, gross rental yields have shifted to their lowest level on record and are lower over the year in most capital cities.
Property Council residential executive director Nick Proud said increase supply of rental property in the ACT combined with Commonwealth public service job cuts caused rental yields to fall.
"Nationally, additional supply brought affordability back to rentals, the increases have been incremental, not like the huge jump in house prices," Mr Proud said. "Rentals in the ACT particularly, started that trend three years ago, and across the country we are seeing affordability come into rentals."
Land Development Agency chief executive David Dawes says ramping up land supply at the new Gungahlin suburb of Moncrieff to bolster the civil works sector helped supply of new homes, and another big positive was new units in Kingston and Tuggeranong coming onto the market. Mr Dawes said if Commonwealth environmental legislation had not held up land releases, the ACT's supply would be in an even better position.
He is more confident than he was a year ago that choice of land at Molonglo and Gungahlin will provide enough supply for a stable market in 2016.
Canberra's median rent for homes of $500 a week, second only to Sydney and Darwin, dropped by 2 per cent in the last quarter and rose 0.7 per cent over the year. Median rent for units is $404, which increased 0.8 per cent over the last quarter, but slipped 0.3 per cent over 12 months.
CorLogic RP Data head of research Tim Lawless says nationally rental prices are not expected to see any massive spikes, and with good levels of new rentals coming on line there will be greater options for people looking for rent.
In the context of incomes, housing affordability remains a problem in Canberra for people at the lower end of the scale. Last week, the authors of the Safe+Well Green Paper, issued as part of Anti-Poverty Week, singled out Canberra's rental prices for making the cost of living in the territory the highest of all Australian capital cities.
The residential outlook report says property is now the biggest industry in the Australian economy, and risks slowing down due to low wages growth, unemployment and rental growth remaining stable over the past five years.
Mr Proud said said nationally the supply of new dwellings was unprecedented.
"When [the population] form more households than we build homes, eventually that is going to create an outcome for price, which means the price goes up. We have been wanting additional supply for some time and we have finally got it, being able to see that supply flow through, we will see pricing elevation, we will see affordability."
In Canberra new home commencements for the year up until June 2015 year totalled 3875, about 8 per cent fewer than the previous year, but slightly up on the 10-year average of 3570. New home completions were 4705, about 4 per cent higher than the previous year and well up on the 10-year average of 3521.
Canberra's home values fell slightly over the year, to 0.9 per cent, and its median house price, of $587,800 grew 13 per cent over the past five years, a smaller increase compared to previous five-year periods.
The report says the key to housing affordability is likely to be found in a supply-side response rather than stoking housing demand via grants or concessions.