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Rental growth slowing , especially in Melbourne and Sydney

Rental growth has started to slow over recent months, particularly within Sydney and Melbourne property rental  markets.

Rental rates increased by 1.1% over the March 2018 quarter and were 2.2% higher over the past year.

Concept Of Real Estate Sales GrowthCombined capital city rents were 1.0% higher over the quarter and 1.9% higher over the year, while combined regional market rents were 1.2% higher over the quarter and 3.1% higher over the year.

The March 2018 quarter recorded slower rental growth than the same quarter in 2017 (1.5%).

Annual rental growth is now the slowest it has been since May of last year.

Over the quarter, rents fell in Darwin (-0.3%) and increased in Sydney (+0.5%), Melbourne (+1.2%), Brisbane (+1.1%), Adelaide (+1.0%), Perth (+1.7%), Hobart (+5.0%) and Canberra (+2.3%).

Over the past 12 months, rental rates fell in Perth(-1.3%) and Darwin (-1.6%) and increased in Sydney (+1.7%), Melbourne (+3.5%), Brisbane (+0.6%), Adelaide (+2.2%), Hobart (+11.7%) and Canberra (+4.2%).

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With dwelling values falling and rents continuing to rise, rental yields have started to lift

At the end of March 2018, the gross rental yield nationally was recorded at 3.7%, 3.4% across the combined capital cities and 4.9% across the combined regional markets.

Houses (3.5%) have lower gross yields than units (4.2%) nationally as well as across the combined capital cities (3.2% vs. 3.9%) and combined capital regional markets (4.8% vs. 5.2%).

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

Throughout the individual capital cities, gross rental yields are currently recorded at: 3.2% in Sydney, 2.9% in Melbourne, 4.4% in Brisbane, 4.3% in Adelaide, 3.9% in Perth, 5.0% in Hobart, 5.8% in Darwin and 4.6% in Canberra.

Gross rental yields are currently higher than they were a year ago in Sydney, Darwin and Canberra however, yields have firmed in most cities over recent months.

With rental growth remaining firm in most areas and value growth slowing we expect to see some further increases in yields over the coming year.

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About

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


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