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Rental growth rates continue to show their weakest performance since 1996

The release of the monthly CoreLogic RP Data Rent Review results for February confirm that over the coming months rents could begin to fall on an annual basis due to additional new rental supply entering the market. The release of the monthly CoreLogic RP Data Rent Review

With construction activity set to peak over the next 24 months, and with many new properties still to settle, there is a real possibility that rental rates will fall over the coming months.

Based on these expectations, landlords have little scope to lift rents while for tenants, it potentially means more surety in securing accommodation and the potential to upgrade into a higher level of accommodation for a similar cost.

The cause of this current slowdown in rental growth is falling wages, excess rental supply in certain areas and lower rates of population growth and population mobility impacting on demand for rental accommodation.

February Findings:

  • Capital city rental rates continue to record no change over the year
  • Weekly rents across the combined capital city measure increased 0.3% in February however rents were unchanged over the past 12 months
  • Rental rates have increased over the year in Sydney (+1.5%), Melbourne (+2.2%) and Canberra (+1.6%) and are unchanged in Hobart.
  • Rents have fallen over the year in Brisbane (-0.7%), Adelaide (-0.4%), Perth (-8.4%) and Darwin (-13.3%).
  • Currently, combined capital city rental rates are $488/week for houses and $467/week for units.
  • CoreLogic RP Data analysis shows rents across the combined capitals rose by 0.3% in February 2016. Rental rates increased over the month in all capital cities except for Perth and Darwin.

Results Summary:

  • Dwelling rental rates across the combined capital cities have not moved and continue to sit at now $485 per week for the past year; at the same time last year rental rates had increased by 1.7% highlighting that the slowdown in rental conditions has been quite sharp over the year.
  • Rental rates in Brisbane, Adelaide, Perth and Darwin are currently experiencing some of their largest annual falls on record.
  • All capital cities are experiencing annual rental changes which are well below their decade average levels.

Weekly rents increased in February 2016 but are unchanged over the year

The analysis shows rents across the combined capitals rose by 0.3% in February 2016.

Rental rates increased over the month in all capital cities except for Perth and Darwin.

1-percent

Dwelling rental rates across the combined capital cities are recorded at $485 per week and they are unchanged over the past year.

CoreLogic RP Data have been tracking annual rental changes since 1996 and over that time rental growth conditions have never been weaker.

At the same time last year rental rates had increased by 1.7% highlighting that the slowdown in rental conditions has been quite sharp over the year.

The causes of the slowdown in rental growth is falling wages, excess rental supply in certain areas and lower rates of population growth and population mobility impacting on demand for rental accommodation.

With construction activity set to peak during over the next 24 months, but many new properties still to settle, there is a real possibility that rental rates will fall over the coming months.

Landlords will continue to have little scope to lift rental rates while for renters it potentially means more surety in their accommodation and the potential to upgrade into a higher grade of accommodation for a similar cost.

Looking across the individual capital cities, over the past year, rents have increased in Sydney (+1.5%), Melbourne (+2.2%) and Canberra (+1.6%) while rents are unchanged in Hobart.

Rental rates have fallen over the past year in Brisbane (-0.7%), Adelaide (-0.4%), Perth (-8.4%) and Darwin (-13.3%).

Rental rates in Brisbane, Adelaide, Perth and Darwin are currently experiencing some of their largest annual falls on record.

All capital cities are experiencing annual rental changes which are well below their decade average levels.

Renal index results as at february

Change in rental rates for houses and units

Annual change in rentas over past 10 years



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About

Cameron Kusher is Corelogic RP Data’s senior research analyst. Cameron has a thorough understanding of the fundamentals such as demographics, trends & economics. Visit www.corelogic.com.au


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