Weekly rents across Australia’s capital cities rose by just 0.3% over the twelve months to the end of November.
It’s the lowest annual growth rate on record, as noted in the CoreLogic RP Data monthly rental review.
The only cities to record an increase of at least 2% in rental rates for the year were Sydney and Melbourne.
Rates fell over the year in Brisbane, Perth and Darwin, while the remaining capitals have seen rents rise by less than 1.5% over the year.
Currently combined capital city rental rates are:
- $486/week for houses
- $464/week for units
Rental Index results as at November 30, 2015
It is anticipated that the rate of rental growth will continue to slow over the coming months due to increased supply of housing and rental stock coupled with slower migration rates which has reduced rental demand.
Dwelling rental rates across the combined capital cities are recorded at $483 per week, an increase of just 0.2% over the first eleven months of the year while over the past 12 months, they have risen by a record low 0.3%.
Today’s results point to a broad trend of weakening rental growth, particularly throughout this year.
With less than one month to go before years end, it is apparent that rental growth will be very soft over 2015
The construction boom across the capital cities, coupled with slowing population growth, low mortgage rates and the recent heightened level of activity from investors who add to the pool of rental stock are the major contributing factors to the slowing rental growth.
Sydney and Melbourne, which have seen the largest ramp up in new housing supply and investor activity over recent year, continued to record rental rises over the past year however, each city is seeing a slowing in the pace of rental growth relative to 12 months ago.
It is clear that the increase in investment stock continues to provide landlords with little scope to lift rental rates while the low mortgage rate environment provides little incentive to push yields higher.
Looking across the individual capital cities, over the past year, Sydney and Melbourne have recorded the greatest increases in weekly rents, albeit at low levels compared with the pace of capital gains, while rents have fallen in Brisbane, Perth and Darwin.
Over the past three months rents are lower in Brisbane, Adelaide, Perth and Darwin, are unchanged in Hobart and have increased in Sydney, Melbourne and Canberra.