RP Data’s popular national quarterly rental market report shows that over the first six months of 2014 house rents remained unchanged across the combined capital cities, while for units, rents increased by 2.4 per cent.
Annually, house and unit rents increased by 2.4 per cent while at the same time vacancy rate data sourced from the Real Estate Institute of Australia (REIA) shows a fall in rates across a majority of the capital city markets over the March quarter; Sydney recorded the lowest vacancy rates of any capital city market with just 1.4 per cent of rental properties vacant, followed by Brisbane (2.3 per cent).
- Capital city rental rates over the three months to June 2014 remained unchanged for houses at $430 per week.
- Unit rents rose by 1.2 per cent to $420 per week.
- Nationally, house rents rose 1.3 per cent to $400 per week, while unit rents remained steady over the quarter at $390.
City – by – city findings – Houses:
- Houses in Sydney, Brisbane, Adelaide, Darwin and Canberra all recorded no change in weekly rental rates over the quarter.
- Melbourne ( – 1.3 per cent), Perth ( – 1.0 per cent) and Hobart ( – 1.5 per cent) all saw a decline in weekly advertised rents over the quarter.
- Rents did not increase in any city over the quarter; Adelaide (1.5 per cent) is the only city to see a rise in rents over the 2014 calendar year – to – date.
City – by – city findings – Units:
- Sydney and Melbourne both recorded a rise in rents over the quarter, up 2.0 per cent and 1.4 per cent respectively.
- Brisbane ( – 1.3 per cent) and Canberra ( – 2.5 per cent) both recorded a fall in rents over the three months ending June.
- All remaining cities saw rental rates remain unchanged over the quarter.
Annual movements on a national basis:
- House rents increased by 2.6 per cent over the year to June 2014, which sits in line with the average annual growth over the past five years of 2.7 per cent.
- Nationally, unit rental rates remained unchanged over the year; well below the average annual five year growth of 2.8 per cent.
- Combined capital city rents for both houses and units increased by 2.4 per cent over the year to June 2014.
- The combined capital city weekly rent is currently $430 for houses and $420 for units.
Key rental statistics to June Quarter 2014
Across the detached housing market, Perth ( – 5.0 per cent) and Canberra ( – 3.9 per cent) saw rents fall over the year to June, while Darwin rents remained steady over the year.
All other cities recorded a rise in rental rates, with Sydney rents up by the most substantial amount (4.0 per cent) with more moderate growth in Brisbane (1.3 per cent).
Similarly, across the unit market, Perth ( – 5.3 per cent) and Canberra ( – 6.5 per cent) saw rents fall over the year to June 2014, while all other capital cities recorded a rise in rental rates over the 12 month period.
Many investors will be aware that rental growth has been relatively subdued since 2008 due to a number of factors such as stimulus from low interest rates and low returns on other asset classes and from savings accounts which enticed prospective new home owners into buying and eased demand for rentals. [sam id=37 codes=’true’]
Based on today’s report, since June 2009, capital city house rents have increased by just 2.7 per cent annually, while units have performed slightly stronger with rents increasing by 2.8 per cent annually.
The quarterly slowdown in rental growth is reflective of the growing demand for housing highlighted by increasing sales volumes which in – turn eases the upwards pressure on rental rates.
According to the results, rental growth has been quite moderate over the past year and Perth and Canberra in particular have experienced significant falls.
Perth’s fall comes off the back of strong rental growth a year ago whilst Canberra rental growth has been weak for a number of years.
With inflation running at an annualised rate of 2.9 per cent over the 12 months to March 2014, rental rates are currently falling in real terms at both a national and capital city level.
In regional markets, we are seeing the rental market shift from one where locations linked with the resources sector were seeing strong rental growth and are now seeing rental rates fall in many instances.
On the other hand coastal lifestyle markets are now starting to see some growth return after many years of poor value and rental growth prospects.
SUBSCRIBE & DON'T MISS A SINGLE EPISODE OF MICHAEL YARDNEY'S PODCAST
Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.
NEED HELP LISTENING TO MICHAEL YARDNEY'S PODCAST FROM YOUR PHONE OR TABLET?
We have created easy to follow instructions for you whether you're on iPhone / iPad or an Android device.
PREFER TO SUBSCRIBE VIA EMAIL?
Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.