Increased housing supply to weigh on rental growth

“The data points to an ongoing softening of rental growth, particularly throughout this year,” CoreLogic RP Data research analyst Cameron Kusher said.

“With just two months remaining to [the] year’s end, it seems that rental growth will be very soft over 2015.”

Mr Kusher said there are a number of key factors contributing to the slowing rental growth rates.

“The construction boom across the capital cities, coupled with slowing population growth, low mortgage rates and the recent heightened level of activity from investors are the major contributing factors to the slowing rental growth,” he said.

Sydney, Melbourne and Brisbane continued to record rental rises over the past year however each city is seeing a slowing in the pace of rental growth relative to 12 months ago, according to Mr Kusher.

Looking ahead, CoreLogic RP Data predicts the rate of rental growth will continue to fall further due to an increased supply of housing and rental stock, and slow migration rates.

“We envisage that growth in rental rates could slow even further over the coming months. In fact, there is the possibility that rental rates will start to fall on an annual basis over the coming months,” Mr Kusher said.

“Remember that there is still a large pipeline of residential construction activity as well as high levels of investment demand which means that people choosing to rent are likely to continue to have more accommodation choices and landlords have limited scope to increase rents.”

[Related: Housing affordability gap widens]