According to the Real Estate Institute of Australia (REIA), the March 2016 quarter CPI figures demonstrate the impact increased investor activity is having by moderating increases in rents.

 “In the current debate on negative gearing the latest CPI figures provide evidence that the current taxation arrangements which provide many Australians with the opportunity to invest in property adds to the housing supply and keep rents lower than they would otherwise be,” the President of the REIA Mr Sanders said.

 “From 2013, when investment in housing started to pick up, we have seen the rate of increase in rents slow

down in Australia. The March quarter 2016 increase was 0.1%, the lowest since March 1995. The annual increase in rents to March 2016 has been 0.9%, again the lowest since March 1995.”

 “In Sydney and Melbourne where much of the investor activity has been focussed the increase in rents in the past twelve months has been 2.3% and 1.4% respectively – the lowest annual increase since June 2006.”

 “Should current taxation arrangements for property be changed, as many are suggesting, we can expect rents to rise substantially”.

 “Overall, the All Groups CPI, decreased by 0.2% in the March quarter giving an annual increase of 1.3%. These figures are well below the RBA’s target zone of 2-3%. The annual changes for the analytical series of trimmed mean and for the weighted median were 1.7% and 1.4% 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 added.

 “With housing affordability and taxation arrangements for housing being key issues in the upcoming Federal election the REIA hopes the debate will be based on rationale evidence such as provided by the CPI figures,” concluded Mr Sanders.

Source: REIA