The latest Corelogic Rental Market Report

Key takeaways

Rents were up 0.8% in April, a slightly lower rate of growth than February and March, but the trend towards smaller households has not reversed, further amplifying rental demand.

Across the individual capitals, dwelling rents rose over the past three months in most cities, with Darwin recording the only fall.

Despite an uptick in gross rental yields, investors with a high amount of leverage are likely to be facing a negative cash flow on their property.

Nationally, rents were up 0.8% in April, a slightly lower rate of growth relative to February and March when the national rental index rose 0.9% and 1.0% respectively.

The slowdown in rental growth is likely to be partly seasonal, with the first quarter of the year generally coinciding with a lift in student demand and new leases at the beginning of the year.

Additionally, as we move through the peak in net overseas migration we could see rental demand gradually easing.

Although rental growth may be tapering, supply remains extremely short and the trend towards smaller households seen through COVID has been slow to reverse, further amplifying rental demand.

It is likely rental growth will remain well above average for some time yet.

Across the individual capitals, the quarterly change in dwelling rents remains above 2.0% in most cities, led by Perth with a 3.9% rise recorded over the past three months.

At the other end of the spectrum, Darwin was the only capital to record a fall in rents over the quarter, although conditions were virtually flat at -0.1%.

National rents have been rising at a faster pace than values since November last year, supporting a rise in gross rental yields.

In April, the national gross rental yield rose to 3.75%, the highest reading since October 2019, up from a record low of 3.16% in January 2021.

Despite the uptick in yields, with investor mortgage rates averaging around 6.7%, it is likely investors with a high amount of leverage will be facing a negative cash flow on their property.

About Tim Lawless Tim heads up the Core Logic RP Data research and analytics team, analysing real estate markets, demographics and economic trends across Australia. Visit www.corelogic.com.au