Premium suburbs in the capital cities have seen some of the biggest falls in asking weekly rents over the past 12 months, new research from CoreLogic RP Data has found.
Median house rents in Tamarama, for example, have fallen by a whopping 40% - although the beachside Sydney suburb still commands $1,800 median rent a week for houses, suggesting the fall is from a high bar.
Property investors have long been struggling with record low rental income growth. In April, CoreLogic reported that weekly rents fell by 0.5% for capital city houses over the past year while unit rents increased by a record low 1.2%.
Combined, weekly rents in the capitals fell by 0.2% over the 12 months to April.
Elite addresses feature prominently in CoreLogic's top five suburbs for unit and house rental falls across all the states and territories.
The waterfront Sydney suburbs of McMahons Point, Bayview and Sandringham all saw annual house rental falls of 20% or more, while unit rental medians fell by more than 10% in Point Piper and The Rocks.
In Melbourne, Parkville house rents were down 21% over the 12 months to April, while Kew houses saw a drop of more than 11%.
The high-end Adelaide suburbs of Gilberton and Malvern saw annual median rental falls of more than 28%, as did one of Perth's most expensive postcodes, Peppermint Grove. Unit rental medians in the Perth beachside suburb of Sorrento also fell by more than 35%.
House rental medians in Brisbane's fashionable New Farm went backwards by more than 21%, while unit medians were down 10% or more in the inner-city suburbs of Paddington and Mount Ommaney.
CoreLogic research analyst Cameron Kusher attributed the nationwide slow rental growth to substantial new housing supply, slowing population growth, weak wages growth and the recent heightened level of purchasing by investors.
“While a drop in rents isn’t ideal for investors, particularly given home value growth is generally slowing, for renters the news is pretty good - it means that they can potentially reduce their housing costs, or find superior accommodation for a similar cost,” he said.
Kusher was more equivocal, however, on the specific falls in many premium suburbs. "Whether this is due to fewer executive rents as population growth slows or previous renters taking advantage of record-low interest rates to borrow to purchase is unknown," he said.
"What is clear is that demand for rental houses is easing and in a number of suburbs rental prices have fallen dramatically.”
Kusher predicted the cost of renting would become even more affordable over the coming years, particularly as more rental supply entered the market in the form of high-density inner-city apartments.