The substantial increase in the available rental properties in Sydney and Melbourne markets could potentially slow the growth in rents, according to a forecast by Domain.
Over the first quarter of the year, Sydney and Melbourne reported increases in rents for both houses and units.
In Sydney, median rents grew by 1% to $530 for houses and 2% to $520 for units. These marked Sydney's first quarterly gains in three years.
"A fall in investment activity and construction at a time of steady population growth has helped to tighten the rental market," said Nicola Powell, senior research analyst at Domain.
On an annual basis, Sydney's median rent for both houses and units went down by 1.9%. Still, Sydney continues to have the highest weekly unit rents and the second most expensive rents for houses amongst all capital cities.
In Melbourne, both housing types reported growth in rents. On a quarterly basis, rents grew by 2.3% to $440 for houses and 2.4% to $430 for units. The city also posted an annual gain of 2.4% for units.
However, Sydney and Melbourne's recent rent growth in rents could be short-lived due to the increasing number of vacant properties in the market, Powell said. This lift in rental listings will, therefore, provide some relief to some tenants.
"Some landlords have moved property from short-term holiday leases to the long-term rental market during the coronavirus pandemic. Some tenants may also opt to reside with family while our lives are impacted by social distancing, job security fears and economic uncertainty," she said.
