The March quarter consumer price index (CPI) data, released today by the Australian Bureau of Statistics (ABS), revealed a continued moderation of rental growth at the national capital city level.
According to the ABS, rents nationally grew by 0.7% over the March quarter of 2013 – up slightly on the 0.6% growth recorded in December – but moderated to 2.9% growth in the year to March – the lowest annual growth recorded since June 2006 (see below charts).
The outlook for rental growth is unclear.
On the one hand, population growth is running strong, 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).
Rental vacancies nationally have also begun to tighten following a prolonged period where vacancies trended upwards, which could also suggest that rental growth may soon strengthen (see next chart).
On the other hand, the labour market remains week and unemployment continues to trend up (see next chart).
Moreover, wages growth is anaemic (see next chart), which other things equal points to lower demand for rental accommodation:
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