Melbourne has finished October with the the lowest renal yielding market for houses, averaging 2.8%.
The divergence in performance between houses and units is most clearly evident in Melbourne.
The annual rate of capital gains in the Melbourne property market remains strong at 9.1%, however there is a substantial difference in growth rates between houses and units, with house values up 9.6% compared with a 5.2% increase in unit values over the past year.
Comparatively, in Sydney and Melbourne, the approved unit pipeline is higher at approximately 96,000 over the next 24 months, however the potential stock uplift is much less significant, at 13% and 16% respectively relative to existing unit stock levels.
Auction clearance rates, which are one of the most timely measures of the fit between buyer and seller expectations, have been tracking in the mid to high 70% range across the combined capital city markets, with the largest auction markets of Melbourne and Sydney general showing a higher rate of clearance.
While dwelling values have broadly risen during October, rental yields in Sydney and Melbourne remain depressed, with gross yields are at record lows.
With ongoing strong value growth and high clearance rates in Melbourne, as well debate around affordability gathering some momentum, there is likely to be further caution by the Reserve Bank around future interest rate cuts. I
f it were to occur, may provide additional stimulus for housing markets around Australia.