The Spetember quarter consumer price index (CPI) data, released today by the Australian Bureau of Statistics (ABS), revealed a moderation of rental growth at the national capital city level.
According to the ABS, rents nationally grew by 0.6% over the September quarter of 2013 – the lowest quarterly rate of growth since September 2005 – and followed last quarter’s spike in growth of 1.1%:
On an annual basis, rental growth nationally slowed to 3.2% in the latest quarter, which was the slowest rate of rental growth since the June quarter of 2006:
It’s hard to say whether rental growth nationally is likely to firm or weaken from here.
On the one hand, population growth has accelerated, which logically suggests that rents should soon be on the rise. However, as shown below, rental growth appears to have recently decoupled from population growth (see next chart).
One explanation for the above divergence is that rental vacancies nationally are trending up, which usually suggests rental growth may weaken (see next chart).
Add to this the soft labour market, and the outlook for the rental market is mixed, at least at the national level.
