Renters surprise winners from cheaper mortgage deposits
Analysts say the lower rents are shaping up as a bonus result of rules allowing first home buyers to get mortgages with just a five per cent deposit, although the policy is likely to boost property prices.
Labour’s key election promise was to make it easier for young Australians to get on the property ladder.
Domain research and economics chief Nicola Powell said allowing more people to buy their own home or unit could also reduce rental demand and pressure on rents.
“What this will do is accelerate the transition for many renters into homeownership, which will help alleviate demand,” he told AAP.
But politics isn’t all that good news; experts warn that the decision to remove the barrier to getting a mortgage (saving for a deposit) could increase demand among home buyers.
Treasury modeling suggests cheap deposits would boost house prices by half a per cent over six years, but the insurance council has warned the impact could be as large as 10 per cent in the first year alone.
A report from Domain published on Thursday shows that the rapid rent increases of the last three years are likely to be over, with rent growth in Australia’s combined capital cities holding steady for two consecutive quarters.
House and apartment rents are at record levels but remained mostly flat last quarter.
Average house rents in Sydney, Melbourne, Adelaide, Perth and Canberra remained unchanged during this period.
Brisbane and Hobart increased and Darwin outpaced all other capital cities with a 5.9 per cent increase.
Average rents for flats in Hobart and Perth have gone backwards.
Unit rents increased in Sydney, Brisbane and Darwin and remained stable in all other capital cities.
Vacancy rates remain low, meaning landlords can still have the upper hand in price negotiations.
But Dr Powell said further rent increases were likely unaffordable for many Australians.
“We’re slowly starting to see a rebalance occur… tenants can only keep up with so much,” he told AAP.
The influx of new rental properties has helped reduce demand along with declining population growth.
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