Rents on the rise as buyers dry up

By finance reporter Lexi Metherell

Updated April 6, 2011 17:43:00

There are signs rents are starting to pick up again, with potential first homebuyers choosing to lease houses rather than buy.

A report by RP Data shows, after sluggish growth in recent months, national rental rates were 1.4 per cent higher in the March quarter than the same quarter a year earlier.

A senior research analyst at RP Data, Cameron Kusher, says rents are likely to continue to rise because higher interest rates, and a cautious attitude among first homebuyers, mean more people are staying in the rental market.

“The first homebuyers aren’t active so, if they’re not buying their own home, they’re either: a) living with their own parents; or b) they’re out there in rental market,” he explained.

“Although migration’s slowing, we’ve still got a growing population … so all the factors are suggesting to us that rental growth during 2011 will be quite strong.”

Mr Kusher says a fall in new home approvals and housing finance indicates that this trend will continue for some time.

“People are just very conservative out there at the moment, first homebuyers are pretty much a non-event in the market at the moment, and that’s going to create more demand for those rental properties, particularly now that we’re seeing building approvals and dwelling commencements starting to taper off as well,” he said.

The report shows the average national rent was around $360 a week in the March quarter.

Capital city house rents were about $20 a week more expensive than the national average.

However, Western Australia’s Pilbara region has the most expensive average weekly house rent at $1,650, while Tasmania has the cheapest at $235 a week.