Average O'ahu apartment rents declined last year for the first time in nine years, according to an analysis by local housing market researcher Ricky Cassiday.

The drop was only 1 percent, to $1,608 per month last year from $1,629 per month a year earlier, but occurred despite the median condominium sale price rising last year by 5 percent to $325,000.

Cassiday said apartment rental inventory, which includes townhomes and multi-story condo units, is being added to the market largely from several residential towers built in Honolulu over the last few years that has helped put downward pressure on asking rents.

And with even more high-rise condos under construction at a time when local economic growth is slowing and condo resale prices are projected to decline slightly, rents are expected to soften some more this year.

"I think rental rates will drift downwards, as softness in the economy seeps into the marketplace, as investors decide it's easier to rent than to sell," Cassiday said.

Cassiday said lower rents will likely be concentrated in urban Honolulu, and less so in Central and Leeward O'ahu where there is more housing demand and cautious development by housing producers.

For many renters, the dip last year in asking rents is providing a bit of relief after average rents — by Cassiday's count — nearly doubled, from $853 per month in 1999 to $1,621 per month in 2005. Home prices also almost doubled over the same period.

But some landlords said the evaporation of subprime home loans last year and stricter lending standards since then have driven more people to the rental market, which has boosted demand and helped sustain rental rates.

"There's a lot of need for rentals," said Lourdes Vergara Marcello, owner of three rental units in Mililani. One of the units is a studio she recently rented for $995 a month (including utilities) that drew heavy interest.

Vergara Marcello said she hasn't felt any pressure to reduce rents, but instead has felt pressure to raise rents because of rising electricity and sewer costs.

"You don't want to raise the rates, but you have to," she said.

Cassiday's measure of rents is based on monthly samples of newspaper advertisements. He said ad counts last year rose modestly, reflecting more inventory on the market, while average prices dipped 1 percent — two signs indicating that the rental market has begun to cool.

O'ahu's for-sale housing market has cooled with fewer sales in each of the past two years, while the median price for single-family homes appears headed for a decline this year after rising 2 percent last year. The last time the median single-family home sale price decreased was in 1999, when it dipped 2 percent.

For the first three months of the year, O'ahu's median single-family home sale price was unchanged at $620,000, according to sales data from the Honolulu Board of Realtors.

The University of Hawai'i Economic Research Organization, or UHERO, predicts that the median sale price of existing O'ahu homes this year will decline 3.2 percent to $619,000, followed by a 2.3 percent decrease next year to $605,000.

UHERO predicts median condo sale prices will decline 1 percent this year to $322,000 followed by a 2.8 percent decline next year to $313,000.

According to Cassiday's rental market analysis, average asking rents on single-family homes declined two years ago from $2,488 in 2005 to $2,267 in 2006. Last year the figure was flat at $2,269.

"It looks like rental rates in the single-family market have rubbed up against a ceiling," Cassiday said. "Condominium unit and townhouse rents usually lag behind."