House rents still increasing for most capitals
House rents have continued to rise in 2017 with rental markets in most capital cities tightening and providing no relief for tenants.
Most capital cities recorded increases in house rents over the quarter with Hobart reporting the highest growth rate of 5.7 per cent to a new record high of $370 per week.
Hobart house rents have now remarkably matched those of Perth.
Melbourne rents were also up strongly over the quarter rising by 2.4 per cent followed by Sydney up 1.9 per cent and Brisbane where house rents increased by 1.3 per cent over the March quarter.
Houses rents were steady in the other capitals.
Canberra, Hobart, Melbourne and Sydney houses rents have each increased sharply over the year ending March rising by 7.5 per cent, 5.7 per cent, 5.0 per cent and 4.8 per cent respectively.
Rental markets in Brisbane, Darwin and Perth remain tenant-friendly by comparison, falling by 1.2 per cent, 1.8 per cent and 7.5 per cent respectively.
Unit rents are also on the rise
Similar to houses, unit rents are also on the rise with most capitals reporting increases over the March quarter.
Melbourne recorded the highest growth, rising sharply by 3.9 per cent followed by Sydney up 1.9 per cent, Canberra 1.8 per cent, Adelaide 1.7 per cent and Brisbane 1.3 per cent.
Hobart and Perth unit rents were steady over the quarter, however Darwin fell by 2.3 per cent.
Canberra and Hobart unit rents have increased significantly over the past year, rising by 8.2 per cent and 5.3 percent respectively.
Perth and Darwin rents however have fallen by 14.3 per cent and 4.4 per cent respectively.
Sydney most expensive for renters
Sydney and Darwin remain clearly the most expensive capitals for tenants with each reporting a median asking weekly house rent over the March quarter of $550.
Sydney unit rents at $530 per week are now significantly higher than the other capitals led by Canberra well behind at $428 per week.
Yields rising with higher rents
Hobart, Canberra and Darwin offer investors the highest gross yields of all the capitals for both houses and units with Sydney and Melbourne clearly the lowest.
Higher rents have acted to generally consolidate rental yields in most capitals over the past year despite higher prices.
Steady yields will continue to provide solid incentive for investor activity in a low yield economy.
Vacancy rates tightening as shortages emerge
Reflecting higher rents, vacancy rates have generally tightened over the month of March with shortages of rental accommodation clearly emerging in a number of capitals.
Melbourne vacancy rate for houses has now fallen to just 1.2 per cent with the unit rate also falling to a low 1.5 per cent.
Recent high and rising vacancy rates however in Perth and Darwin for both houses and units are now showing early signs of stabilising
Rent rises set to continue
Tenants can expect little relief from higher rents with declining rental affordability now emerging as a significant issue in most capitals.
High migration and low numbers of first home buyers are continuing to fuel already strong demand.
Recent record level housing construction has failed to ease rental markets, particularly in Sydney, Melbourne and Canberra.
With policymakers continuing to signal prospective initiatives designed to curb investor activity through tax or interest rates measures, the outlook for tenants certainly remains bleak if these policies result in fewer available rental properties.
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