Recently Dr Andrew Wilson, the senior economist with Australian Property Monitors reported on how each city’s rental market is performing.
He explained that the rental market growth for units outperformed houses during the year to September and asking rents for units are approaching those for houses in most capital cities. During the September quarter median asking rents for houses fell nationally by 0.2% while asking unit rental prices picked up by 1.1% in the quarter.
Wilson suggests unit rental prices increasing at a greater rate in most capital cities compared with houses indicates increased competition from discontented first-home buyers entering the rental market, particularly in late 2010 and early 2011.
“As a consequence, the median weekly asking rentals for units is now fast approaching that of houses in many capital cities, as the overall demand for units for both lifestyle and affordability reasons continues to be greater than the demand for more expensive and generally outer-suburban houses,” says Wilson.
“With the prospect of continued stable interest rates, an expected increase in buyer activity will take the pressure off the rental market by decreasing competition for available rental properties and motivating investors to re-enter the market,” he says.
shortage of housing is set to drive rent and property price rises. Investor activity will increase, particularly for new apartments in the middle- and outer-ring suburbs.
Apartment rents jumped 2.2 per cent in the September quarter, the highest rise in the nation. This, coupled with flat property prices, means yields are increasing. Apartments bring a 5.1 per cent return; houses 4.5 per cent.
There’s certainly plenty to choose from here, for both buyers and tenants. Rents have remained static throughout the year.
Melbourne has the highest vacancy rate and despite a modest fall in property prices this year, gross yields for apartments are 4.4 per cent and houses 3.9 per cent. Record levels of new inner-city apartments are coming on to the market.
Demand for rentals this year increased due to the January floods and, with property prices dropping by about 5 per cent, gross rental yields for apartments are 5.19 per cent, up 10 per cent over the year, while rental yields for houses are 4.91 per cent, up 9.4 per cent. Investors will be alert to a price recovery through 2012 as the economy improves.
Rental yields in Perth have increased considerably in the past year, reflecting the nation-leading fall in property prices. Gross yields for apartments in the September quarter were 5.2 per cent and 4.6 per cent for houses. Expect a significant revival in the Perth housing market next year, with price growth driven by the full arrival of the mining boom. Investors take note.
Falling property prices have resulted in increases in yields. Gross rental yields for apartments are 4.86 per cent, up 2.8 per cent. House yields are 4.56 per cent, up 5 per cent. There’s the prospect of a modest recovery in buyer activity next year but little price growth is expected.
Quiet times ahead as the local economy continues to splutter and buyers, sellers and renters remain wary. Prices and rentals should move sideways in the short term, with yields remaining stable.
This year’s roller-coaster ride is set to continue next year, with prices and rental increases taking hold as the underlying shortage of houses drives up buyer and renter demand. The local economy should start to improve after falling away this year.
This volatile market should re-emerge next year with strong prices and rental growth. A shortage of dwellings and the mining boom will underscore positive outcomes for investors.
Source: Australian Property Monitors
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