Released yesterday, the RP Data National September Quarter Rental Review 2014 found that while house rents remained flat at 0 per cent growth, rental rates for units increased by 2.4 per cent.
According to RP Data national research director Tim Lawless, investors entering the rental market need to be aware that rents aren’t rising anywhere near the pace of capital gains which is pushing rental yields lower, particularly in Sydney and Melbourne. In these capital cities, values have increased the most at a time when rents aren’t doing comparatively much at all.
Mr Lawless noted that while detached house rents remained unchanged across the combined capital cities over the quarter, this cannot be said for each individual city.
Brisbane is only city where rents remained unchanged.
Melbourne (2.6 per cent), Darwin and Hobart (both 1.5 per cent), Adelaide (1.4 per cent) and Sydney (1.0 per cent) all recorded a rise in rents, while Perth (-2.7 per cent) and Canberra (-2.0 per cent) recorded a fall in rents.
“The performance of rental markets are diverse, however the common theme is that generally the rate of capital gain is outpacing the change in weekly rents which is driving rental yields lower,” Mr Lawless said.
“This is happening at a time when investment demand is at record levels and trending higher, which highlights that most investors are focussing on capital gains and ignoring the low yield scenario,” he said.
“The softer rental conditions are likely the result of the surge in investor related activity which is seeing more rental supply hit the market.”
For houses, Darwin currently holds the highest weekly median rental rate at $660 followed by Sydney at $525, Canberra at $480, Perth at $462, Brisbane at $400, Adelaide at $350, Melbourne at $390 and Hobart at $330.
For units, Darwin once again emerged as the most expensive market on the rental rate front by recording the highest weekly median rental rate for the quarter at $550 followed by Sydney at $500, Perth at $450, Brisbane at $390, Canberra at $383, Melbourne at $370, Adelaide at $300 and Hobart at $275.