What factor can lead to a decrease in rental prices?

A surplus of rental properties available can indeed lead to a decrease in rental prices due to the basic principles of supply and demand. When there are more rental properties on the market than there are tenants looking to rent, landlords may be compelled to lower rents to attract potential tenants and fill vacancies. This oversupply creates competition among landlords, which can drive rental prices down.

In contrast, increased demand for housing, high employment rates, and high-quality property upgrades typically work to stabilize or increase rental prices. Higher demand, often driven by job growth and economic stability, usually results in competition for available properties, which pressures landlords to maintain or raise rents. Moreover, properties that undergo significant upgrades tend to attract higher paying tenants, enhancing their rental value rather than diminishing it. Thus, the relationship between supply dynamics, specifically a surplus of properties, and market behavior substantiates why this factor directly correlates with decreasing rental prices.