Rent report: Units play catch up to houses in housing-short Sydney, Domain says

Jul 14 2016 at 12:01 AM Updated Jul 14 2016 at 12:01 AM Rent report: Units play catch up to houses in housing-short Sydney, Domain says New supply, but no easing in rents: Melbourne CBD rents are stubbornly high. New supply, but no easing in rents: Melbourne CBD rents are stubbornly high. Craig Abraham by Michael Bleby Unit rents have risen to nearly equal house rents in Sydney, where new supply has yet to ease the demand for well-located homes in a severely under-supplied market. The median unit price rose to $525 in the June quarter from $520 in March, putting it marginally below the median house rental price of $530, which was unchanged from the previous quarter, the latest Domain Rental Report shows. Unit rents have risen 5 per cent over the past year, while house rents have gained just 1 per cent. "Sydney is a chronically under-supplied market, certainly for rentals," Domain senior economist Andrew Wilson said. "Tenants are being squeezed." Median weekly rents in June quarter and percentage change over the past 12 months Median weekly rents in June quarter and percentage change over the past 12 months Domain Group is owned by Fairfax Media, publisher of The Australian Financial Review. Housing construction is accelerating, even as approval numbers of future developments are slowing. New multi-housing starts jumped in March to a record 31,261, ABS figures on Wednesday showed. However in Sydney, where the bulk of new supply has yet to feed through to the market, rents are being pushed higher by tenants who, priced out of houses, have opted for apartments on the grounds of price and their more convenient location. The picture was different in Brisbane, where decade-low levels of migration into southeast Queensland and the recent state budget boost for first home buyers were weakening the rental market. Rents of units fell to $375 from March's record $380 and houses slipped to $400 from $410. While prices are still up, or equal to, their level of a year ago, vacancy rates for both dwelling types have increased, suggesting rents will fall further - especially given the large numbers of new apartments due to settle in the Queensland capital, Dr Wilson said. "The signs are all there for more supply than demand," he said. "It means downward pressure on rents in Brisbane." Melbourne rents held steady, holding at the record levels they hit in March of $380 a week for units and $400 for houses. Vacancy rates are increasing as a result of new supply hitting the market but the increase over the past year of 2.7 per cent for units and 2.6 per cent for houses still represented solid growth, Dr Wilson said. "There is no real sign of a shift in rents yet," he said. "Melbourne is still in reasonable balance." It was unclear, however, why rents in the Melbourne CBD hadn't come down given the large numbers of new city centre apartments, he said. "We know the majority of new supply is in the CBD, but the cost of CBD rents is almost confoundingly high," he said. "The median price is about $500, well ahead of the $380, which is the Melbourne median." House rents in Perth slumped to $390 per week - their lowest in five years. The Adelaide unit market, after an inner city building boom, was showing 'some weakness', Dr Wilson said. Unit and house rents fell from March. Read more: http://www.afr.com/real-estate/residential/nsw/rent-report-units-play-catch-up-to-houses-in-housingshort-sydney-domain-says-20160713-gq4r6o?&utm_source=social&utm_medium=twitter&utm_campaign=nc&eid=socialn:twi-14omn0055-optim-nnn:nonpaid-27062014-social_traffic-all-organicpost-nnn-afr-o&campaign_code=nocode&promote_channel=social_twitter#ixzz4ELgVW4Gx Follow us: @FinancialReview on Twitter | financialreview on Facebook