Rents edged up over January

Nationally rents were up half a percent in January taking the annual change in rental rates to 1.3%.

Rental growth generally remains weak across most markets, however the recent trend has been towards a subtle rise in rental appreciation.

A year ago the national rental index was rising at an annual rate of just 0.4%.Rent

The improvement in rental rates can be attributed to a tightening in rental supply.

Housing finance data shows investor participation in the housing market is near record lows and new supply additions are tapering.

Hobart remains the tightest rental market, with rents up 5.8% over the past twelve months, followed by Adelaide (+2.0%) and Perth (+1.9%), while rents are still trending lower on an annual basis in Darwin (-1.9%) and Sydney (-0.6%).

With housing values rising more rapidly than rental rates, gross rental yields are swiftly compressing.

Screenshot 2020 02 03 18.07.43

Across the combined capital cities the gross yield was tracking at 3.50% in January; the lowest yield reading since March 2018 and only eleven basis points away from record lows.

Gross rental yields in Sydney, where housing values have surged higher against a backdrop of falling rents, remain at record lows, tracking at just 3.0% in January.

Higher rental yields can be found in cities where rental conditions have been stronger relative to housing values.

Despite overall weak housing market conditions, Darwin gross rental yields are the highest of any capital city at 5.8%, which is a reflection of housing values falling more than rental rates.Wooden Blocks With Coins, Dollar, Graphs Laying On Real Money

The healthiest yield dynamic is in Hobart where overall tight housing conditions have pushed gross rental yields to 5.0%, providing a total return (gross yield plus annual capital gain) of 10.5%.

Although gross rental yields are trending lower, so too are mortgage rates.

At the end of December, the average three-year fixed rate for an investor mortgage was 3.48%.

This is still slightly lower than capital city gross rental yields, implying that more properties will be showing a positive cash flow for investors, and paying off a mortgage may be more affordable than paying rent in many areas.

Au Property Event 01 – 1

icon-podcast-large

Subscribe & don’t miss a single episode of Michael Yardney’s podcast

Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.

Need help listening to Michael Yardney’s podcast from your phone or tablet?

We have created easy to follow instructions for you whether you're on iPhone / iPad or an Android device.

icon-email-large

Prefer to subscribe via email?

Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.


Michael Yardney

About

Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


'Rents edged up over January' have no comments

Be the first to comment this post!

Would you like to share your thoughts?

Your email address will not be published.
CAPTCHA Image

*


Copyright © Michael Yardney’s Property Investment Update Important Information
Content Marketing by GridConcepts