Urbis Think Tank
Canberra rental prices continue to rise
Content provided by Mark Solonsch
Things are happening in Canberra. As well as Canberra City and Braddon appearing on the “Urbis Hip List” of hip suburbs, the rental market across all Canberra’s suburbs has been going from strength to strength. The annual compounding growth rate for 2 bedroom dwelling rents has been 7.4% for the last 10 years and the consistency of the growth over that extended period has been another feature of the market.
Is Canberra really coming of age and what’s creating this demand?
The answer, in part, is students, however the bulk of demand comes from the transitory public service.
Students are more likely to rent than non-students. Across Australia, 6.5% of the population are students in a tertiary or technical institution, but in Canberra, this jumps up to 10.5%. So, with so many more students that means that there is much higher rental demand per capita in Canberra than in other cities, which has helped to result in very low vacancy rates and increasing rents, despite the fact that both Australian National University and University of Canberra have a strong supply of on campus accommodation.
Students are also trend-setters. Young, without the ties of adulthood and middle age, these are the people who create the vibe of a city – especially at night. Over the years, Canberra has lacked the bars, clubs and other social institutions that are normally associated with high densities of students, but that is changing, driven by a sharp increase in apartment buildings, particularly in Civic, the city centre.
So as the density of students increases in Civic and surrounding suburbs, the number of quality bars and nightclubs has increased. In addition, this has also been supported by the Canberra City area plan that aims to double the number of people living in the inner city over 6 years.
The changing face of the public service is the other major contributing factor, with an overall growth in the public service over the past 10 years. Even with “efficiency dividends” being sought by the Commonwealth Government, the public service is still likely to grow over the long term, which will bring more people to Canberra, many of whom are on a short to medium term basis. As such many of these people are looking for rental options rather than entering the home ownership market,
The combination of high student numbers and the transitory nature of the Commonwealth public service has been the key driver of growth in the rental market, and are set to continue this trend into the future.
Boring old Canberra really is changing.