Rental rates grow at slowest pace on record
According to the May CoreLogic RP Data monthly rental review released this week, rental rates have increased at their slowest pace on record over the past month which will come as good news for renters.
Both Hobart and Sydney have seen strong rental growth over the past year with Hobart’s rents increasing by 3.2% YoY and Sydney by 3.1%, whilst Sydney still remains the most expensive capital city to rent with the current figure standing at $595 per week.
According to Cameron Kusher, author of the report, “Sydney stands out as seeing strong population growth which is creating more demand for accommodation in the city”.
Even though Sydney has seen the highest rental growth over the past 12 months, rental yields are just 3.6%, falling from 4.0% from 12 months ago. Melbourne has also seen rental yields drop from 3.6% to 3.3%. Both these cities have the lowest yields out of all capital cities, but Mr Kusher believes that investors in both cities are obviously not targeting rental returns. “It appears to be purely a capital growth play and likely to remain this way, at least for the time being,” he stated.
When looking for property as an investment, Brisbane is one such option to look at; however growth won’t be as high as Sydney or Melbourne just yet. Current rents in Brisbane sit at $435, over $150 cheaper than Sydney’s rental prices and has increased by 2% YoY. Rental yields have also remained steady since this time last year at 4.6%.
Overall, the combined capitals current rental figure is $488 per week with a growth of 1.5% over the past year, whilst the rental yield has dropped from 4.0% to 3.7% over the past 12 months.
Mr Kusher states that the annual rate of rental growth is now the slowest on record, which is likely to be caused by the continuous boom in dwelling construction throughout Australia’s capital cities combined by high interest from the investor market.
Published on 12th of June 2015 by Marty Stanowich