Rental affordability is a key issue for Canberra tenants. Surging rental prices have put additional pressure on the household budget, limiting saving capacity. For many tenants this has further dashed the dreams of home ownership.
Rent increases resulted in Canberra becoming one of the most expensive Australian capital cities in which to rent a house, with a median of $540 a week - this is only $10 per week behind Sydney and Darwin, as of the December quarter of 2017.
Canberra is the second most expensive Australian city to rent a unit at $430 a week. Unit rents are significantly below Sydney's leading $545 a week.
House rental prices in Canberra increased 5.9 per cent over the quarter to reach a new record of $540 per week. Prices are 8 per cent higher than this time last year, making the nation's capital the second strongest market for house rental prices growth.
Canberra was one of the two capital cities with growth in median unit rental prices over both the quarter and year, up 2.4 per cent to $430. Following roughly half a decade of price fluctuation the improvement takes unit rents back to 2012 prices.
Units provide the biggest sector of Canberra's rental market, comprising almost six of every 10 properties leased over the December quarter of 2017. Particular Canberra districts have experienced greater price hikes than others.
Inner North unit tenants are facing the biggest price hikes, up annually by 6.8 per cent to $470 a week as of the December 2017 quarter. Tuggeranong had an annual price rise of 5 per cent to $420 a week. Despite the level of development in Gungahlin, unit rents jumped 4.6 per cent annually to $400 a week. Inner South units command the heftiest rent at $500 a week; prices have risen by 4.2 per cent annually.
Woden Valley suits tenants seeking an affordable price-point. The district had the lowest median weekly rent at $380, increasing by 2.7 per cent over the year.
A lower level of annual price growth was recorded in Belconnen which rose by 2 per cent to $390, and Weston Creek up 1.3 per cent to $407 a week.
Tenants should be prepared for further rental price rises as macro prudential policies cool investor lending, tightening available stock in an already competitive market.
The transient nature of Canberra's population will continue to drive demand. This could affect the rental market, particularly if interstate migration continues along the same trajectory.