Overview of the Australian residential rental markets

Rental rates nationally have been falling since May 2018.

Rental rates fell by -0.3% over the December 2018 quarter however, they were 0.5% higher over the past year.

Annual rental growth is the slowest it has been since July 2016 and lower than the 2.7% growth recorded in 2017.

Combined capital city rents fell by -0.4% over the quarter to be unchanged throughout 2018.

Combined regional market rents were 0.3% higher over the quarter and were 1.8% higher over the 2018 calendar year.

Over the quarter, rents fell in Sydney (-1.4%) and Darwin (-2.0%) while they were unchanged in Melbourne and increased in Brisbane (0.3%), Adelaide (0.6%), Perth (0.4%), Hobart (0.9%) and Canberra (0.6%).

Over the past 12 months, rental rates fell in Sydney (-3.0%) and Darwin (-5.8%) and they were higher in Melbourne (2.4%), Brisbane (1.5%), Adelaide (1.5%), Perth (2.0%), Hobart (5.8%) and Canberra (5.3%).

With dwelling values falling faster than rents, gross rental yields have continued to lift

At the end of December 2018, the gross rental yield nationally was recorded at 4.0%; 3.7% across the combined capital cities and 5.0% across the combined regional markets.

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Houses (3.8%) have lower gross yields than units (4.4%) nationally as well as across the combined capital cities (3.5% vs. 4.2%) and combined regional markets (4.9% vs. 5.3%).

Across Australia, gross rental yields have softened over recent years however, they have started to lift marginally over recent months as values have fallen.

Throughout the individual capital cities, gross rental yields are currently recorded at: 3.3% in Sydney, 3.5% in Melbourne, 4.5% in Brisbane, 4.4% in Adelaide, 4.1% in Perth, 4.9% in Hobart, 5.8% in Darwin and 4.6% in Canberra.

Gross rental yields are currently higher than they were a year ago in all capital cities except Hobart and Darwin.

Although rental growth nationally is slowing, it is expected to remain stronger than value changes and as a result yields are expected to continue to firm over the coming months.

Source: Corelogic Quarterly Economic Review - released February 2019

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