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The latest consumer price index (CPI) figures from the Australian Bureau of Statistics show the impact of increased investor activity in moderating rent increases, according to the Real Estate Institute of Australia (REIA).
REIA president Neville Sanders says the CPI figures for the March 2016 quarter provide evidence that the current property tax arrangements help housing supply and keep rents lower than they would otherwise be.
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The ABS figures showed that the overall CPI dropped by 0.2 per cent during the March quarter, but increased by 1.3 per cent from the corresponding quarter in 2015.
“These figures are well below the RBA’s target zone of 2 to 3 per cent,” Mr Sanders said.
“The annual changes for the analytical series of trimmed mean and for the weighted median were 1.7 per cent and 1.4 per cent respectively. This is the lowest annual increase since the two series were introduced in June 2003 and should ease any pressure on interest rates, providing a stable outlook for home buyers.”
Mr Sanders noted that when investor activity started to pick up in 2013, the growth rate in Australia’s rent prices slowed.
“The March quarter 2016 increase was 0.1 per cent – the lowest since March 1995. The annual increase in rents to March 2016 has been 0.9 per cent – again the lowest since March 1995,” he said.
“In Sydney and Melbourne where much of the investor activity has been focused, the increase in rents in the past twelve months has been 2.3 per cent and 1.4 per cent respectively – the lowest annual increase since June 2006.
Mr Sanders said that with housing affordability and property tax arrangements being key issues in the upcoming federal election, the REIA hopes the debate will be based on evidence such as the latest CPI figures.
[Related: Rental yields dip across all capital cities]
