Rents in Canberra fell 07 per cent in the December quarter

Rents in the ACT dipped 0.7 of a percentage point in the three months to December, according to property market research firm CoreLogic - the only jurisdiction in the country where they declined.

The dip dragged the annual rental growth rate down to 4.3 per cent, lower than any other capital city in Australia.

But, while new and existing tenants are not being confronted with the sort of rent price increases they were hit with a year ago, that is yet to translate into a lift in the number of people looking to rent, according to Real Estate Institute of the ACT (REIACT) chief executive officer Maria Edwards.

Ms Edwards said her members were reporting conditions in the Canberra rental market were "very quiet at the moment. There are a lot less people looking for a property to rent".

January is typically a busy month in Canberra's rental market but the REIACT official said current uncertainty about the economic outlook could be making people hesitant about moving.

"People are sitting back and watching and don't want to overcommit themselves," Ms Edwards said, adding that competition for more affordable properties could further intensify.

"The cost of living is hitting tenants as much as landlords, so people who might have considered paying $700 a week are now looking at paying $600 a week."

READ MORE:

CoreLogic's head of Australian research, Eliza Owen, said a big downturn in Canberra's net migration is also likely to have contributed to soft rental demand, which peaked in mid-2022.

Australian Bureau of Statistics figures show the ACT lost a net 3318 people through interstate migration in the 12 months to June last year, which Ms Owen said was "the biggest loss from interstate migration on record going back to 1980".

"That is probably what is still loosening up the rental market. People are seeking more affordable housing and job opportunities elsewhere."

The phenomenon has contributed to an increase in rental vacancies, and Ms Owen said Canberra was leading the nation in its "pivot" in rental market conditions.

The turn in the rental market with a fall in house prices, which have declined 7.6 per cent since last June.

Lower prices have helped attract buyers back into the market despite the scale of recent interest rate hikes, Ms Edwards said.

"Members report they are getting great numbers of people coming through houses [for sale]," she said.

"People are wanting to get in before interest rates rise higher and the cost of borrowing increases."

While the influx of buyers could help limit the decline in house prices, Ms Owen warned ACT homeowners to expect them to fall further yet given the likelihood of further rate rises.

Most economists expect the Reserve Bank of Australia Board to raise the cash rate to 3.35 per cent at its meeting on February 7.

We've made it a whole lot easier for you to have your say. Our new comment platform requires only one log-in to access articles and to join the discussion on The Canberra Times website. Find out how to register so you can enjoy civil, friendly and engaging discussions. See our moderation policy here.