Rents outpacing wages in every state except ACT

In contrast, he said the ACT offered a better supply of new-build flats. He added that this is clearly seen in the value of flats for sale, which have not moved much.

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“Apparently [Canberra] The market is much more balanced in terms of supply and demand. ACT did not experience the same demand-side shocks as mid-cap companies. “Interstate migration and overseas migration have not been this extreme,” he said.

“It’s really limited value growth and rent growth. That’s good evidence of the positive impact housing supply has on affordability.”

The ACT capped rent increases in 2019 so landlords could only increase rent by the inflation rate of Canberra rentals plus 10 per cent.

Lawless did not think rent caps were limiting the ACT’s rent growth because ACT rents rose by just 2.8 per cent in the 12 months to September.

“That’s not even close to the 10 percent mark, and it hasn’t been in the last five years,” he said.

Despite speculation that the state’s rent reforms would put upward pressure on rents, he noted that Victorian rents rose by just 2 per cent in the 12 months to September, the lowest level nationally, which “so far does not appear to be the case”.

Center for Independent Studies chief economist Dr. Peter Tulip said the overall increase in rents was due to a tight market and unusually low vacancy rates.

“Given that population growth is expected to outpace construction in the next year or two, the tightness in the rental market and therefore the strong growth in rents is likely to continue,” he said.

“Over long periods, rents have risen faster in Sydney than in other cities… Sydney has been building houses more slowly than other cities. The Minns government is trying to change this. Tenants in Sydney hope they will succeed.”

He said the ACT’s low growth in rents reflected its rapid rise. The district approves 11 buildings per 1,000 people per year; this is more than any other jurisdiction and above the national average of eight.

It also said the ACT rent cap only limits rent increases to continuing tenancies and does not apply to rents advertised to new tenants under Cotality data.

ANU associate professor Ben Phillips, of the Center for Social Policy Research, agreed that the ACT’s slower rent increases were due to lower population growth and greater housing supply.

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“The ACT has probably had pretty strong housing supply in recent years, which has probably changed things in our favor in the ACT compared to some other jurisdictions where there’s been stronger population growth and housebuilding hasn’t been as strong,” he said.

“It’s always good for governments to ensure that there is a reasonably strong and healthy supply coming into the market. This has been the focus of most governments.”

AMP chief economist Dr Shane Oliver attributed the rent increases to a shortage of rental accommodation and the ACT’s plight to greater property supply.

“The main reason for this is the very low vacancy rates we see in Australian capital cities, which means landlords are in a strong position to increase their rents in the face of high levels of demand,” he said.

“This is partly a rebound from lower house prices – housing is getting more expensive, people are turning to the rental market – and partly it reflects an underlying increase in population-based demand.”