Inflation figures reveal the impact of the COVID-19 pandemic on the rental market, according to the Real Estate Institute of Australia (REIA).

The latest report from the Australian Bureau of Statistics (ABS) showed that the consumer price index (CPI) for housing dropped by 0.2% over the year to September quarter, driven by the decline in rents.

"Rents fell in most capital cities due to continued weak rental market conditions and high vacancy rates arising from COVID-19. Rents recorded the first annual fall in the history of the series," the ABS report said.

Rents decreased in all capital cities except Canberra, where rents increased slightly by 0.2%.

The largest drop was 0.7% in Darwin and the smallest was 0.1% in Brisbane, giving a weighted capital city fall of 0.2% for the quarter and a fall of 1.4% for the year.

"Rents fell in the September quarter in most capital cities due to continued weak rental-market conditions with renters moving to cheaper areas and negotiating lower rents," said Adrian Kelly, president of REIA. “This is the first annual fall in the history of the series when ABS started the series in September 1973.”

Kelly said this could indicate the need for the government to extend its rental assistance programs beyond December this year.

A recent survey by showed that while 40% of renters are now finding it easier to manage their lease payments, 24% remained unemployed due to the COVID-19 pandemic. Furthermore, the survey showed that only 11% are optimistic about life post-pandemic.

"There are a bunch of external factors that are leaving renters with a general feeling of less control than they would like. Factors like unemployment, uncertainty, changing rules on JobKeeper and JobSeeker, and restrictions are all playing a role," said Greg Bader, CEO of