Capital cities' rental markets appear to be moving in favour of renters in terms of affordability, according to the latest report from ANZ and CoreLogic.

Over the past five years, Australia's capital cities reported a 0.9% annualised growth in rental market values, which the report said indicates a "shift towards improved affordability".

Rental value growth has been weak across some of the larger state capital markets over the past few years. The report said this could be due to the surge in investment and housing development that occurred between 2012 and 2017, particularly across Sydney, Melbourne and Brisbane.

In Sydney, the regions with the steepest decline in rental values are the Inner South and Eastern Suburbs.

Melbourne reported a steadier performance, which was supported by the historically high international migration. However, the COVID-19 outbreak, which has halted growth in the movement of people, has also resulted in Melbourne rents slipping by 1%.

Brisbane, on the other hand, had the weakest growth in rent values. The report said this could be attributed to a high influx of investor-grade stock over 2016, when units were being built across Brisbane at an unprecedented level. While rental values gradually gained momentum, the COVID-19 outbreak triggered a reversal.

However, while rents fell over the previous quarter, it is crucial to consider the substantial income losses over the period due to the COVID-19 outbreak. Citing figures from the Australian Bureau of Statistics, the report said the total wages paid between mid-March and mid-June fell by 6.3%.

The report said that for renters who are less affected, or unaffected by the COVID-19 downturn, affordability may improve markedly, depending on the region in which they are located.

On the other hand, rental affordability may further deteriorate in the coming quarters for some renters, especially if the rate of joblessness and income decline continues to rise.